Minister denies a property bubble and shortage of land

PUBLISHED : Wednesday, 27 April, 2005, 12:00am
UPDATED : Wednesday, 27 April, 2005, 12:00am

There was no bubble in Hong Kong's property market despite the recent boom in prices, the housing minister said yesterday.

Michael Suen Ming-yeung also said there was no land supply shortage even though latest figures showed the number of flats being built was falling.

The secretary for housing, planning and lands denied the government had restored a high land-price policy, but warned that the market may be destabilised if the administration put too much land up for sale.

'We are closely monitoring the market. From the data we have, there is no such thing as a bubble or shortage of supply,' said Mr Suen.

Speaking at a Legislative Council planning, lands and works panel meeting, he defended the heavily criticised application list system for land auction. Under this system, developers can trigger an auction by meeting the government's minimum bid.

Property prices have rebounded by more than 50 per cent since the end of the Sars outbreak in 2003. Figures showed that no developers were able to trigger land auctions under the application list system since the start of the year, with some companies complaining that the government asking price was too high. Some small and medium-sized developers also said the land banks were running out.

But Mr Suen said: 'The application list system provides a market-driven mechanism and allows flexibility in determining the quantity and timing of land to be put up for sale. The system provides clarity, consistency and certainty to the property sector as well as other market players.'

He said accusations that a high land-price policy was being restored were unfounded.

Mr Suen said the prices at which sites were sold in the past six months had been much higher than those that triggered auctions. The government assessed land prices on the basis of open market value, taking into account prevailing market conditions.

'There are other ways for developers to acquire land for property development, such as modification of lease conditions for lots owned or by taking part in the property development projects of the two railway corporations and the Urban Renewal Authority. Together with the application list, there is no shortage of land supply in the market,' the minister said.

He also defended changes to lease condition procedures, which developers have said are too complicated. Mr Suen said some developers kept changing their minds on how land should be developed, which lengthened negotiations on land premium payments.