C.Y.'s 10-point housing plan too weak to cool property market, say analysts

Chief Executive's 10-point plan to provide more affordable flats unlikely to cool the market

PUBLISHED : Friday, 31 August, 2012, 12:00am
UPDATED : Friday, 31 August, 2012, 3:19am

The government announced 10 measures to increase short-term housing supply yesterday, but analysts say it is unlikely to bring down property prices.

Chief Executive Leung Chun-ying said the measures were in response to the overheated market which is "influenced by three extremely unusual forces: a weak global economy, an abundance of liquid capital and keen demand".

"The hidden economic risk cannot be neglected," Leung said.

Half of the measures were to raise short-term housing supply, including launching early next year the sale of 830 Home Ownership Scheme (HOS) flats in Tin Shui Wai, which were put on hold because of a short-piling problem in 2000; putting the 1,000 flats in Tsing Yi under the My Home Purchase Plan for sale to families earning less HK$40,000 a month at a discount, while dropping the rental option; and converting the Chai Wan Factory Estate for public rental housing with 180 units.

Kelvin Lau, an analyst at Standard Chartered Bank, said the immediate impact of the measures appeared limited as the extra supply was small. "The absence of a further hike in the stamp duty or other more draconian measures to limit household borrowing could be a relief for some … The risk of a sizeable price correction still appears low."

Adrian Ngan, analyst at Citic Securities International, agreed the package would not result in any price correction.

For the private sector, the Lands Department will speed up approval for pre-sale of 9,000 planned flats. But officials admitted it was up to developers to decide when they wanted to sell their projects.

For the mid-term, a review will consider an alternative scheme to replace the My Home Purchase Plan, criticised by the Housing Society, administrator of the plan, as financially risky.

To increase the supply of HOS flats, a site at the former Kai Tai airport, earmarked for a home compensation scheme for urban renewal, and a temporary golf course in Cheung Sha Wan, will be changed to provide 480 and 2,300 flats respectively.

Officials will place priority on an existing plan to rezone 36 sites for public facilities into residential to provide 11,900 public and private homes. They will also study how to make it easier to convert old factories into homes.

Leung said legal drafting had begun for the much-debated ban on non-locals buying property in Hong Kong. Government sources would not comment on whether the special stamp duty would be tightened further.