Hong Kong housing

Demand from mainland buyers key to new long-term HK housing strategy

Members of committee tasked with drawing up long-term housing plan for city say restrictions may have to be imposed to keep prices in check

PUBLISHED : Monday, 24 September, 2012, 12:00am
UPDATED : Tuesday, 22 September, 2015, 4:52pm

Hong Kong's first new long-term housing strategy in 14 years must take into account demand from mainland buyers to provide a basis for price-control measures, say members of the committee set up to compile the plan.

One committee member said taxes and restrictions on loans to non-locals for second homes should also be explored to ensure housing serves local needs.

The Long-Term Housing Strategy Steering Committee - due to meet for the first time next month and chaired by the housing minister, Professor Anthony Cheung Bing-leung - is tasked with coming up with a projection of the city's housing needs and making recommendations on how to meet demand.

Cash-rich mainland buyers have been accused of inflating property prices, which this year surpassed their 1997 peak. But the government does not record how many homes are sold to non-locals.

Estate agents provide estimates based on the spelling of clients' names, meaning those buying through companies are missed, but say mainlanders account for more than 20 per cent of luxury flat sales.

Marco Wu Moon-hoi, a member of the committee and an adviser to Chief Executive Leung Chun-ying's election campaign, said the study should include a new category of demand from mainland buyers.

"Times have changed. We cannot ignore their demand and have to consider how to accommodate their needs - provided they are genuine needs," said Wu, a former director of buildings. "We have to do a survey to find out how many of them buy a home for self-use, how many for long-term investment and for speculation. We also need to take into account those who come regularly for short stays."

Fellow committee member, Michael Choi Ngai-min, said lawyers may be required to record the nationalities of buyers when processing transactions in future.

Another member said the panel might have to go further in restricting non-local buyers.

Professor Eddie Hui Chi-man, an expert in real estate at Polytechnic University, said the success of Leung's plans to make two new developments at Kai Tak available only to local buyers would be assessed, but less restrictive measures to curb speculation would also be explored.

He said the authorities should look at extra stamp duties to curb excessive outside investment, like those introduced in Singapore last year, or tightening mortgage loans to outsiders buying a second property in the city.

But Wu and Choi said long-term restrictions on non-local ownership would not fit in with Hong Kong's status as a free economy and the locals-only rule should be seen as a short-term measure to cool the market.

"If a mainlander buys a home and leases it to locals, this will not affect housing supply," Choi said.

Choi said the government had to make it easier for young people to buy or rent a home. It should look at the waiting list for public rental housing, where about a quarter of the 200,000 applicants are students or young graduates.

The comments come amid a debate over plans for three new towns in the northeastern New Territories, which would displace thousands of villagers. The government says the homes are needed to meet a housing shortfall, but critics have accused it of failing to take into account changing projections for population growth, the need for government-subsidised home ownership and the impact of mainland buyers on the local market.

The last attempt to project the city's housing needs and systematically identify sites to meet flat production targets was in 1998. The steering committee responsible for implementing the strategy was wound up as home prices slumped in 2003.