Leung's commitment to housing ban on non-residents is questionable
Official evasion over the scale of a residents-only housing scheme suggests it is merely a gimmick
A 30-year resale restriction underlying the new housing measure, "Hong Kong property for Hong Kong residents", came as a surprise last week, as some core advisers of Chief Executive Leung Chun-ying had earlier tipped off the media that the sales ban imposed on non-residents would last for only three years.
The extended commitment from the administration has left people wondering whether it is an attempt to win public support, particularly in the wake of a political crisis over national education classes. Critics remain unconvinced about the effectiveness of the change of plan.
They do not think the ban will lead to cheaper flats on the selected sites because there are few other restrictions: a buyer has to be a permanent resident but need not be a first-time home buyer, and there is no rule against leasing to foreigners. Others say it will only push mainlanders to buy property on sites not covered by the ban, pricing locals out of those places.
On the other hand, optimists think the ban could boost public confidence in government policy and reduce "panic purchasing" seen in recent months.
On questions of whether the measure can soothe anxious buyers, we have to look at the scale of the scheme. It is understood that when Leung drafted his manifesto for the chief executive election, his policy team aimed to create a new market for the middle class - who are too rich to buy a subsidised Home Ownership Scheme flat, yet not among the moneyed group able to afford a so-called luxury home.
The ban is intended to apply to flats worth HK$3 million to about HK$8 million, and to sites that locals consider convenient, such as in traditional urban centres or near MTR stations. The choice of two Kai Tak sites for the pilot scheme reflects this line of thinking.
Indeed, mainland buyers have been active in the luxury housing sector, but they are also increasingly so in the mid-priced sector. According to rough estimates by Centaline Property Agency, for flats worth less than HK$12 million, the market share that mainland buyers represented rose from about 10 per cent in late 2009 to nearly 30 per cent in the past year.
For properties costing more than HK$12 million - both new and second-hand homes - mainlanders featured in 27.3 per cent of the deals in the July to September quarter.
Leung's campaign team, in a brainstorming session, floated suggestions of fixing a target percentage of new sites under the locals-only scheme. An aggressive idea was to set aside as much as half of the new sites in the mid-priced market.
The debate on the effectiveness of the plan should focus on the number of sites that will be restricted, the targeted market share, and whether the land-sale programme that takes place every quarter will involve such sites. But from what officials said last week, the message and the determination was unclear: they said they would "continue to consider" adopting the ban when the market was overheated.
For now, the answers are vague, and the shortage of land for housing continues, ahead of an increase in the land supply that is expected in a few years. Under these circumstances, it's hard to envisage Leung's middle-class market becoming a reality, and his ban appears to be little more than a political gimmick.