Adviser's call to buy brings mixed response
Remarks by the Chief Executive's top adviser Leung Chun-ying encouraging people to buy property have received a mixed response from property experts who are divided over future prospects.
Mr Leung, convenor of the Executive Council and managing director of surveying firm C Y Leung & Co, said in a radio show on Saturday that home prices had reached bottom and he advised people to buy now if they could.
Warburg Dillon Read chief property analyst Franklin Lam said Mr Leung was speaking for political reasons, on behalf of the Government to boost potential buyers' confidence in the housing market.
Mr Lam said there were many potential buyers with ready cash, and the fundamentals in Hong Kong were good enough to attract them to the market.
But people remained hesitant as they had no confidence in the Government's 'confusing' housing policy, he said.
In the past two years, there had been a growing belief that the Government did not want any rise in home prices, he said. That resulted in less desire to buy.
Brooke International chairman Nicholas Brooke said Mr Leung was right about urban areas, which would see a limited supply of flats.
Mr Brooke agreed it was the right time for first-timers to buy urban flats, as prices in urban areas had bottomed. He said he was less confident about the New Territories where the market was very fragile due to the oversupply situation.
There were 15,000 to 20,000 unsold units in the New Territories, he said.
Developers would slash prices to get rid of them, which could see a modest 5 to 10 per cent price fall in the next couple of months, he said.
Mr Brooke said he would recommend that upgrading buyers wait.
'There's no pressure [for them] to do anything.' Landscope Surveyors managing director Koh Keng-shing believed there was no need to rush into the market because prices would not increase substantially.
'If the Government policy is to stabilise price performance, how is a substantial rise possible?' he said.
The possibility of further price cuts could not be ruled out, he said. Developers were keen to increase cash flow by volume sales, which might lead to massive supplies and price cuts, he said.
Johnny Ho, director of David C Lee Surveyors, said prospective buyers should be cautious about entering the market, as it was more likely to fall slightly than rise.
New properties remained unsold while land auction results and the general economic outlook had not been good, he said.
For newly married couples with income constraints, renting would be more appropriate than buying, Mr Ho said.
However, Jones Lang LaSalle regional director Joseph Tsang said he would strongly recommend buying where possible.
He said he could not see any further significant downside in prices, saying the market had bottomed out and an annual 10 per cent-plus increase in prices was possible.
A G Wilkinson & Associates assistant director Michael McGuire said there was nothing solid to recommend buying properties now.
He said it was at best a 'neutral' situation and people need not jump into the market.
Prices for Hong Kong property remained at quite high levels compared with the rest of the world, he said.
He could not see a quick pick-up in the economy and even with a recovery, wages would not increase immediately.
Centaline Property Agency managing director Shih Wing-ching agreed with Mr Leung, saying it was the right time to buy.
Prices had fallen recently and they were not far from the bottom.
'Considering a horizon of three to five years, today is a good opportunity to buy bargains,' Mr Shih said.
Affordability had reached an eight-year high while export and re-export figures were improving, he said, adding that the only problem was market sentiment.