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Peggy Sito

Sandy Li

The housing strategy to be introduced by the Special Administrative Region government after the handover will have only a short-term impact on property speculation and home values, according to a majority of the developers, estate agents and property analysts surveyed by Property Post.

 Most believe that the SAR government will not impose either capital gains taxes or transfer taxes in its campaign to stamp out property speculation.

 Property prices will begin to rise again after a short period of consolidation, they say.

 Questionnaires were sent to 30 developers, property analysts and real estate agents between June 20 and June 23.

 Of the 30 surveyed, 18 questionnaires were returned, representing a 60 per cent response rate.

 The territory's 10 major developers were among those surveyed, including Sun Hung Kai Properties, Cheung Kong (Holdings), Swire Properties, Henderson Land Development and Sino Land & Co.

 Of these, only two responded - Kerry Properties and Lai Sun Development.

 The survey's aim was to study the sector views on the outlook of the residential market following the return of Hong Kong to Chinese sovereignty.

 A total of 77.8 per cent of respondents said that Chief Executive-designate Tung Chee-hwa's soon-to-be-announced housing policy would drive speculators from the market in the short term.

 Those who believed the housing policy would have no impact at all numbered 16.7 per cent. A further 5.6 per cent had no opinion.

 Those who saw an impact on speculators said property prices would consolidate in the coming months, dampened by the anti-speculation measures.

 Analysts said demand for housing also would be dampened by other possible measures such as restrictions on bank lending and pre-sale rules.

 About 72.2 per cent of those surveyed believed that the residential market would start to consolidate within six months and 22.2 per cent said there would be a correction during the period.

 'Until the policies are announced, there will be an element of uncertainty in the market which will affect housing prices in the short term,' Kerry Properties said in its survey response.

 The SAR government's long-term housing strategy, aimed at providing a steady and consistent housing policy in the territory, is being undertaken by Leung Chun-ying, a top aide to Mr Tung.

 Recently, there has been much speculation that Mr Leung, also a Provisional Legislature member, had recommended that Mr Tung take a series of tough measures including tax charges on property speculation.

 The rumour has resulted in a 70 per cent decline in property transactions in the past couple of weeks, according to estate agents.

 However, two thirds - or 66 per cent - of those interviewed expressed confidence that the SAR government would not impose a transfer tax or capital gains tax to curb the rampant speculation which is dogging the market.

 Salomon Brothers analyst Michael Green said Mr Tung faced a dilemma.

 'It will be difficult to conceive of a policy which results in market stability and simultaneously provides enough housing to satisfy market needs and perceptions,' he said.

 About 61.1 per cent of respondents predicted that in 12 months' time prices would have gone up. Among them, 45.5 per cent said prices would rise 6-10 per cent, while 36.4 per cent said they would be up 11-15 per cent. Two respondents said residential prices would rise 0-5 per cent.

 Almost one third of the respondents predicted property prices would go down and the rest had no opinion.

 About 61 per cent of respondents said that speculators would come back to the market in the long term.

 A total of 83.3 per cent of respondents said that Mr Tung's eagerly awaited policy moves were the 'major variable' affecting housing prices in the short term.

 In the long run, most considered supply and demand for housing would continue to be the major variables affecting prices. Some said banks' lending policy and interest rate trends in both the US and Hong Kong would be the crucial factors.

 Finally, 61.1 per cent of respondents said they expected mass residential prices to increase the most during the coming year, with the remaining 38.9 per cent predicting that the luxury sector would perform better.



Sector sees no tax moves