Finance chief warns homebuyers to think about what they can afford

Would-be homeowners were issued a buyer-beware warning by the city's finance chief as prices continue to rise despite a raft of government measures to cool the market.

Weeks after he announced steps to dampen home prices, Financial Secretary John Tsang Chun-wah said he was still worried about the situation. Tsang said the administration could take more steps to stabilise prices and address speculation.

'The increase in housing prices is worrisome,' he said. 'The administration is watching the situation carefully and will take action if prices climb too high. Buyers should carefully consider how much they can afford before deciding whether to buy a home.'

His list of potential solutions included increasing the supply of housing, preventing over-borrowing and stepping up the supervision of sales of new homes.

Tsang also stressed that the interests of the city's nearly one million property owners had to be considered. 'Heavy fluctuations in the price of property are unfavourable to economic and social stability, since many citizens see their residential properties as the most important investment in life,' he said.

'There are more than 840,000 households in town living in self- acquired private property. We believe they would not want to see the government introducing policies that would depreciate the value of their flats.'

Speaking after Tsang in the traditional motion of thanks for the chief executive's policy address at the Legislative Council, Secretary for Development Carrie Lam Cheng Yuet-ngor called for flexibility over residential land supply.

Housing minister Eva Cheng also said she would speed up progress of the My Home Purchase Plan, a new subsidised housing initiative that has been widely criticised for not supplying enough flats and for the long time lag until it comes into effect - 2014.

The scheme will supply a total of 5,000 'no-frills' flats, of which the first phase of 1,000 will be offered in 2014.

She said: 'We expect to open the scheme for application in 2012. We will study with the Housing Society the practicality of accelerating the timetable. If the scheme received a good response, the government would strive to provide more land for this scheme.'

But she emphasised the time constraints in building the flats. 'Many lawmakers lambasted the scheme, that it could not immediately resolve the plight of home aspirers,' Cheng said. 'Any housing scheme needs time for planning and construction.'

The ministers' pledges did not stop lawmakers continuing attacks on the cooling measures.

Civic Party lawmaker Alan Leong Kah-kit said the chief executive 'knew the root of the illness but was not curing the patients'.

'Everyone knows the resumption of the Home Ownership Scheme can help, but Tsang is not adopting it, that is why the structural and in-depth conflicts remain,' he said.

Meanwhile, a Hong Kong University survey shows public support for the My Home Purchase Plan falling.

Long lead time

The year when the first homes built under the My Home Purchase Plan will be available: 2014