Officials have rolled out a new measure to increase housing supply and bring prices down. From this month, developers can sell unfinished flats 30 months ahead of scheduled completion instead of 20 months. The plan is welcomed by some as giving more choices to buyers but criticised by others as helping developers offload stock at a time when interest rates may rise and prices fall.
The latest in a series of actions aimed at increasing short-term property supply, it will enable developers to release an estimated extra 15,000 units onto the market. The new flats include major projects such as YoHo Town phase three in Yuen Long and the fourth phase of Double Cove in Ma On Shan.
Similarly, a batch of 2,100 Home Ownership Scheme subsidised flats will be sold late next year, 24 months before completion, compared to the usual 15-month pre-sale period.
Developers will no doubt benefit from the extended pre-sales period in the near term. But there is no reason to consider it a gift to them. There is a short-term housing shortage in the private market. This will help increase supply. Under the plan, buyers will have more pre-sale flats to choose from, flats which otherwise would not have been available for nearly a further year. Previous measures, such as the doubling of stamp duty on the purchase of properties worth more than HK$2 million, have brought down prices, a goal the latest measure will help the government to achieve.
Of course, it is not without new risks for buyers. Because of the US-HK dollar peg, interest rates are expected to rise. If you believe that would bring down prices even more, you are unlikely to jump into the market. But this is more of a problem for speculators and investors than end-users, whose priority is to own a property rather than reap a quick profit.
Still, buyers must exercise caution, as they may be paying in a rising-interest-rate environment when the pre-sold flat is still not ready for occupancy. They will have to factor in such risks carefully when they make purchasing decisions.