C.Y. Leung faces a long wait before his property measures take effect
As the government works on a long-term housing strategy, observers warn that the market is likely to get even more heated
Property prices will remain high and may even continue to rise until the new administration's housing measures begin to kick in, industry watchers say.
Prices have soared throughout Chief Executive Leung Chun-ying's first 100 days in office, breaking records despite a dozen measures to tackle the problem, and the setting up of a steering committee to devise a long-term housing strategy.
The committee meets for the first time this Friday. Last Friday, the Centa-City Index, which tracks changes in home prices in the secondary market, hit a record 110.14.
Prices of second-hand Home Ownership Scheme flats also rocketed after Leung announced in July a policy to allow 5,000 families to buy them at a discount next year.
In an interview with the Post last week, Leung said the overheated market was partly a result of the euro debt problem and also a result of "many years of un-production". "I'd be dishonest if I told Hong Kong the government had a quick fix," Leung said. "If we didn't do what we did in the last three months, the situation would be far worse."
Lawrence Poon Wing-cheung, a spokesman for the Institute of Surveyors' housing taskforce, said Leung's focus on raising land and housing supply was well placed, although some may have expected him to take more drastic measures.
"To existing homeowners, his policy is about right. To the twenty-somethings that cannot afford to buy or rent their own home, it's a failure," Poon said.
Poon said he expected that, the market would remain vulnerable in the coming few months until measures start to take effect in the next couple of years.
These will include the presale of 1,830 flats under two subsidised housing schemes for the middle-class; the sale of two sites in Kai Tak under the locals-only scheme; and the release of 9,000 new flats in the private sector.
The government has drawn up possible measures to dampen the market if it becomes heated up even more by external factors. Options being considered are believed to include a heavier special stamp duty, a special tax on foreigners' additional home ownership, a higher property tax rate, and a new value-added tax on earnings from property resales.
There are also other short-term measures the government could take to help stabilise the market, said Michael Choi Ngai-min, another committee member. The presale of the 5,000 new Home Ownership Scheme flats, which will be completed by 2016, could be started next year instead of waiting till 2014. Choi said.
Poon urged the Long-Term Housing Strategy Committee to think of solutions such as public rental housing for the lower middle class with a rent higher than existing levels.