Plan to boost HK housing supply in short term misses the point, critics say

Critics say 10-point plan to boost short-term supply of homes ignores key issues, including speculation and lack of new sites for housing

PUBLISHED : Saturday, 01 September, 2012, 12:00am
UPDATED : Saturday, 01 September, 2012, 4:05am

Chief Executive Leung Chun-ying's 10-point plan to increase short-term housing supply showed a lack of determination to tackle the city's overheated property market, analysts said yesterday.

Critics said the 10 steps announced on Thursday would not cool the market in the long term. They said that supplying 1,800 flats in Tin Shui Wai and Tsing Yi in the next few months would not be enough to meet demand.

At the briefing to announce the measures, Leung refused to say whether he believed they would be effective in bringing prices down to below the levels seen before 1997, the previous market peak.

Dr Lawrence Poon Wing-cheung, a spokesman for the Institute of Surveyors' housing task force, said it was difficult to boost housing supply suddenly, because of the time needed to find sites and prepare them for construction.

"The biggest mistake in the 10-point plan is that there are no punitive measures," Poon said, referring to speculation that a special stamp duty, introduced in 2010, would be toughened by imposing the tax on buyers who resell within three to five years.

Officials say the current tax, covering resales within two years, has effectively curbed speculation. They say a review will be conducted only next year.

Poon agreed there was no need to expand the scope of the stamp duty now, but said there were other punitive options to control demand in the long run, even though some would consider them radical. For example, a value-added tax could be imposed on profit made by an owner when a property was resold.

"This will reduce investment in property. But is society ready to accept it? It needs discussion, but I don't think the government will dare touch it."

Another of the medium-term measures is to rezone 10 of 36 sites which are currently zoned for "government, institution and community" (GIC) use to residential use, to provide a total of 2,140 flats.

Vincent Cheung Kiu-cho, a surveyor and national director for Greater China at Cushman & Wakefield, said this would be a challenge for the government.

"The residents living near the GIC sites expect that government or community buildings will be only five to 10 storeys high. If the sites are rezoned for residential use, they will be high-rise buildings. This will provoke objections from the residents."

Also, the sites may not be released for sale immediately, even if the government was to win rezoning approval swiftly.

"It usually takes two years to rezone a site. Then you have to wait for the buildings on the site to be vacated. Once the site is vacated and sold, it takes another three years to build the project. The total development period would be five years or more," Cheung said.

Alnwick Chan Chi-hing, head of valuation and professional services at Knight Frank, said the 2,140 flats made available by the rezoning would be a drop in the bucket.

"It won't have any immediate impact on the property market. I think the government has tried their best to increase land supply. But the real problem in the city is lack of development sites."

Chau Kwong-wing, chair professor of the department of real estate at the University of Hong Kong, said the 10 measures fell into two categories.

One was to generate new supply, like rezoning government sites and redeveloping industrial buildings, which was a step in the right direction. But the other was to bring forward planned supply, which was useless for cooling the market, Chau said.

Chau also expects that the committee for a long-term housing strategy, to be set up later this month, will assess demand for housing from locals and outsiders separately, because currently officials keep no statistics on the number of mainland buyers of properties in Hong Kong.

Wong Kwun, president of the Federation of Public Housing Estates, said the 10-point plan could also have included more plans to raise supply of the much-awaited Home Ownership Scheme (HOS) flats - sold at subsidised prices to those priced out of the private market.

Wong had suggested to officials that some public rental housing under construction in Kowloon East could be converted into HOS homes for sale to public housing tenants, so that their rental units could be recovered.

Wong also said vacant government sites now used by short-term tenants such as car parks should also be used as soon as possible for homes.

Officials defended the package, saying it was the duty of the government to boost supply and cater to Hongkongers "investment needs".

Room for more

Housing measures announced on Thursday include:

  • Tin Chung Court, Tin Shui Wai: 830 Home Ownership Scheme flats put on hold due to short-piling problem in 2000 to go on sale early next year
  • Tsing Luk Street, Tsing Yi: 1,000 flats being built under the Housing Society's My Home Purchase Plan to be sold early next year, rental option dropped
  • Chai Wan Factory Estate, Lee Chung Street/Kut Shing Street: 1959 building, historic because it is one of the city's first H-shaped blocks, to be preserved and converted into 180 public rental homes
  • Kai Tak area: site reserved for Urban Renewal Authority's flat-for-flat compensation scheme will be used instead to build 480 public rental flats.
  • Tonkin Street, Cheung Sha Wan: temporary lease of site to a golf club to end, 2,300 public rental homes to be built two years earlier than planned