Hope for home buyers
THE Government's property package is trying to create a situation where potential home buyers can clearly assess the market before they rush in to buy a flat.
It will enable them to see the large number of flats that will come on to the market in the near future, and they will not feel stampeded into hastily buying a flat they cannot afford.
In future, no one should feel that the next 100 flats coming on to the market are going to be the last 100 before prices go up further. Therefore, they will not feel they have to stretch their income to buy one.
That sort of pressure should not be put on home buyers. Instead people should think carefully and make a more rational assessment of their situation.
Potential purchasers should ask themselves whether they really need a flat right now, whether they can afford it and whether they're sufficiently reassured by the Government's package to wait.
That sort of rational reaction from the consumer would help everyone by limiting demand to those who really need to buy a flat, rather than those who are being sucked into the market, either for fear of being left behind or speculative reasons.
If speculators now have their fingers burned, they will be getting no more than they deserve.
Hong Kong has been in a difficult state in recent years, where we've all been affected by heavy demand and short supply in the property market, and I think the community has little sympathy for those who have been exploiting this painful situation.
The measures we are putting in place mean the pickings for the speculators will be cut substantially from the levels of the past couple of years. Anyone who persists in speculating, especially in the market for new flats, will be taking a much greater risk than they have in the past.
Steps will be taken to bring the new measures into force over the next few days.
Under the new consent scheme, the number of uncompleted flats available for private sale by developers will be reduced from 50 per cent to 10 per cent.
The time limit for forward sale of uncompleted flats will be reduced to a maximum of nine months before the completion date specified in the sale and purchase agreement. No re-sale will be allowed before the Certificate of Compliance or consent to assign is given.
To increase the cost to speculators, the initial deposit will be fixed at 10 per cent of the purchase price. Five per cent will be forfeited if the purchaser fails to complete the transaction.
To reduce speculation in car parking spaces, no forward sale will be allowed unless they are sold with the residential units.
The revised consent letter necessary for implementing our measures will be ready this week. The Government will also follow the issue through with the Real Estate Developers' Association.
We will be pushing the developers to voluntarily apply these new requirements under the revised consent scheme, even in cases where new developers have already been given consent but the flat leases have not yet been put on the market.
More information will be provided on pre-sale flats, the supply of new properties coming on to the market and recent transaction prices, either through a new property column in the Consumer Council's Choice magazine or through a separate publication.
This will give a more precise picture of the present state of the property market which should help potential home buyers make a rational decision.
The Housing Society will also begin working on the eligibility criteria for the pre-sale of Sandwich Class Housing Scheme flats that we announced last week, so that the first such sales may be made in our Tsing Yi project at the end of this year.
The society is also examining the feasibility of early registration and vetting of eligible households in advance of the pre-sale of flats in future projects.
THIS would relieve successful applicants of any pressure to enter the private property market, since they will be assured of being able to buy a flat in the subsequent phases of the Sandwich Class Housing Scheme.
Our proposals have been handed to the Chinese side of the Sino-British Land Commission and we will be in touch with them about this in the near future, since our proposed 15-hectare increase in the land allocation for 1994-95 will need formal discussion and agreement.
The property task force will remain in existence, working directly with the relevant government departments to get up-to-date statistics on the state of the market.
This will include closely monitoring the latest developments and, in particular, the number of vacant premises and short-term resale of flats.
While we are confident the package we have announced will work, and that no further steps will be necessary, the task force will continue to look at possible legislative measures.
These include punitive stamp duty on short term re-sale of property and penal rating on vacant premises.
These are just examples of the measures we will consider. Work has yet to be done on how to frame legislation in these areas, and we will also look at other options.
In the medium and long term, the re-establishment of the post of Secretary for Housing will help with forward planning.
The major policy role for the new secretary during the 1990s is likely to involve clearing the way for private flats to be built so we can have a smoother response to the levels of demand in the property market.
The Government will not be intervening directly in the market: that is not our role. But something has to be done about the present distortions in the market. Because of the long lead time in building new properties this must involve long-term measures to dampen speculation as well as supply side measures.
In future, the administration will try to ensure that it has a lot more information available about the production programmes in the private sector so that we can put in place mechanisms to eliminate extreme distortions between supply and demand.
Tony Eason was in conversation with the Sunday Morning Post.