• Sat
  • Nov 1, 2014
  • Updated: 8:40pm
CommentInsight & Opinion

Solution to affordable housing lies in increasing supply

PUBLISHED : Saturday, 17 May, 2014, 3:38am
UPDATED : Saturday, 17 May, 2014, 3:38am

When the government sought to rein in the runaway property market with a controversial doubling of stamp duty last year, there was an understanding that it was specifically targeting speculators. Now that prices have eased somewhat, it is tempting to relax the rules. Officials sought to ease opposition to a bill to make the doubling of duty law by offering minor adjustments. Some are taking this as a sign of more amendments to come. Yet, while property transaction volumes have dropped, the measures have been in place for just 15 months. We hope the government will not introduce further relaxations of them.

Amid mounting opposition from the property industry and pro-business lawmakers, the government has adjusted the waiver for buyers changing flats. Instead of restricting the exemption to those who sell and buy again within six months, the period will be extended to the actual date when the purchase of a new flat is completed. This gives buyers more leeway - about two extra months for secondhand homes and up to three years for uncompleted flats. The proposed change is only technical, but it makes buying a flat for self-use easier without compromising the objective of dampening speculation.

Whether the move will stimulate the market is yet to be seen. But some analysts see it as a loosening of regulatory control, especially as the "locals-only" land policy - an initiative by the chief executive to shut out cash-rich mainland speculators - has already been put aside. The government had said it would conduct a review in light of the market situation one year after the bill was passed. It would therefore be wrong to read too much into the latest relaxation. As the financial services chief warned, property supply remains tight and the market uncertain. He has rightly resisted political and market pressure and stood firm on the anti-speculation measures.

It is good that the rise in property prices has been arrested. By March, the pace of growth in home prices had slowed to an average of 0.1 per cent a month, down from 2.7 per cent before the doubling of stamp duty. Even so, home prices are still out of reach for many prospective buyers. The ultimate solution lies in a steady supply of new housing in the short and longer term. The chief executive has pledged to provide more affordable flats, but the progress still leaves a lot to be desired. He has to redouble efforts to make good on his promise.


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Gosh, somebody had a bright spark at the SCMP.

Too bad it didn't come 10 years earlier when Donald & Co began to squeeze supply down to hitherto unimaginable levels - where it remains.

Between 1997 and 2004, private housing supply in Hong Kong was over 20,000 per year, up to even 30,000 units a year. From a family formation and immigration point of view, that was actually still too little, but it was a lot better than what happened afterwards.

Since 2006, there hasn't been a single year in which the supply has been above 15,000, and in many years it has been < 10,000.

Note that even the government's plan to provide 470,000 flats in the period 2013-2023 (although we are already one year in, and it is not exactly going anywhere fast), would only take the private supply (60% of those 470k = 282k) back to level of the early 2000s. It would still not make up for the shortfall of the past decade, and actually our family formation and immigration rates have picked up, not declined since then.

Graph is here:
How many unoccupied luxury properties, bought as speculative investments by non-residents, are there in HK?
Judging by the the number of lights burning in the evening in many of these developments, there are tens of thousands of them.
They have no tenants and never will have as their mainland buyers believe that leasing reduces the value of a property..
Availability and affordability are what confront ordinary citizens in buying a flat in Hong Kong.
The two are interrelated that one reinforces the other. Both are subjected to multiple manipulations of unnatural moves in the absence of natural population growth in Hong Kong. The government’s pumping up population growth by importing mainlanders with 150 people daily to settle in Hong Kong (most likely for revenue growth from land and property) and developers who sit on land banks with impunity and diverting housing supply to outsiders until recently.
If Hong Kong can remove those manipulations we should lessen the demand on housing supply as the focus. In fact, the contrary would be true that more supply there is the more shortage in housing it will become. The immediate measure is to halt immigrants for revenue policy and put a tax on idling land.
Yes, I agree too...SCMP, duh?
Donald and Co. really messed things up, the problem is there are still leftovers from his time in office...

I am not unaware the change of slogan use by developers disguising the demand of housing as from the locals who want to upgrade. Really there is such a big aggregate market in upgrading? Perhaps those price-trumped up unsold ‘luxury flats’ are now looking for a local market. Yes, the property developers keep manipulating property market in Hong Kong to no end.


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