PropertyHong Kong & China
BRICKS & MORTAR

When a friendly conversation falls flat

Talking property is a quick way to dampen the mood among would-be homebuyers

PUBLISHED : Tuesday, 02 April, 2013, 12:00am
UPDATED : Tuesday, 02 April, 2013, 5:36am

It didn't take long for my friends to start complaining about home prices when we all caught up last week over dinner. Some have been dreaming of their own place for years and wonder if they'll ever be able to afford one.

Coincidentally, across town, the government had just opened the tender for two residential sites in Kai Tak under the Hong Kong Property for Hong Kong People scheme.

The scheme is designed to help local permanent residents become flat owners, and the two sites - the first ones come on stream since Chief Executive Leung Chun-ying launched the programme in September - will yield at least 1,145 homes that'll be restricted to Hongkongers for the first 30 years.

But my friends didn't seem to set much store by the scheme, even though surveyors estimate the land price could take a 10 to 30 per cent hit because of the sales restrictions.

"Theoretically, it is a good move to dampen demand by non-locals, particularly mainlanders, as they are one of the reasons for the property price surge," one friend said. "But 1,100 or so homes is far from enough. There are nearly a dozen of us here who want to buy a flat, let alone in the rest of Hong Kong."

Another friend chimed in: "And it's hard to tell how these 'Hongkonger-only' properties will be priced in the future. They're not likely to be cheap as there's no price restrictions. I'm happy that the pool of eligible buyers will be smaller, what I really want is affordability."

There may be hope on that front. According to some surveyors, the sites are likely to go for between HK$4,500 and HK$5,000 per square foot, in gross floor area terms, compared with HK$5,000 to HK$6,500 for land without the sales restrictions. Factor in a construction cost of about HK$3,000 or more per buildable square foot, and the flats will have to sell for at least HK$10,000 per square foot to be viable.

Newer secondary flats nearby, say at The Latitude, are going for HK$10,000 to over HK$11,500 per square foot. So the new flats are unlikely to be cheaper unless there is a big change in the market.

"I wish the scheme's flats were limited to local first-time flat buyers, just as [co-founder of Centaline Property Agency] Shih Wing-ching advocated. Because we really are the ones who urgently need our own home," a friend, who plans to get married next year said.

Another friend cut in: "Do you really think barring about 1,100 buyers from buying properties here will make the flats cheaper? Even the buyer's stamp duty introduced on non-local and corporate buyers has hardly pushed down home prices. It's already too late. Flat prices are really high and unlikely to fall much unless the underlying economic situation changes radically. And if it does, we could lose our jobs and wouldn't be able to afford a flat anyway."

This dire projection was followed by silence and then a switch to happier topics - we were determined not to let property prices ruin the party.

paggie.leung@scmp.com

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