Moves to hit property speculators scrapped

PUBLISHED : Sunday, 13 September, 1998, 12:00am
UPDATED : Sunday, 13 September, 1998, 12:00am

THE Government moved yesterday to stimulate the flagging property market by scrapping a series of anti-speculation measures, halving the initial deposit required and allowing smaller subsequent advance payments.

'Speculation seems not to exist in our property market nowadays,' Secretary for Housing Dominic Wong Shing-wah said. 'The measures can be relaxed to allow both developers and buyers flexibility in buying and selling their flats.' The measures, introduced in 1994, were aimed at raising costs to deter speculators. But now flat-buyers will be able to pay only a five per cent deposit, instead of the previous 10 per cent, on signing a preliminary purchase agreement.

The move also scraps restrictions requiring buyers to pay a minimum of 20 per cent of the flat price on signing the final purchase agreement 14 days later.

'The Government will allow the developers to decide the actual amount with their customers according to market conditions,' Mr Wong said.

On a $1 million flat, buyers would need at least $300,000 cash-in-hand under the old rules. Under the new rules, the deposit would amount to $250,000 or less, depending on the deal struck.

The move is expected to bring more benefits for 22,000 low to middle-income earners under the New Starter Loan Scheme and Home Purchase Loan Scheme, who might lack cash for deposits because their loan applications take an average of 40 days to process.

The relaxed measures allow developers to keep 20 per cent of flats from each project for private sale to staff, directors and relatives, compared to 10 per cent allowed previously.

Developers and property agents last night welcomed the move, but urged officials to further relax rules on selling to developers' staff and families.

'The percentage of private sales could be relaxed to 30 or 35 per cent, so developers would not have to suffer so much,' Hong Kong Property managing director Michael Choi Ngai-min said.

'They are spending a huge amount of money on gimmicks and advertisements in order to make their projects sound attractive to customers in public sales, which still are not promising.'