Top economist weighs in on supply side of property debate

Limiting the supply of land and subsidised flats was a more effective way to prop up the property market than reducing stamp duty and boosting tax concessions, an expert said yesterday.

It is understood the four options are all under consideration by the government to bolster the market.

Professor Leonard Cheng Kwok-hon, head of the department of economics at the University of Science and Technology, said controlling land supply and suspending sales of Home Ownership Scheme (HOS) flats could help the market digest the 20,000 unsold new private flats in the market.

He believed many families could afford to buy homes but poor market sentiment had discouraged them from doing so.

Professor Cheng accused the government of oversupplying HOS flats and sending mixed signals which had further hampered the ailing property market.

The annual supply of HOS flats reached 31,030 during the property peak in 1997/1998 but the supply has been reduced to 2,451 until September after the lifting of a 10-month suspension of sales in July. The Housing Authority says the number of HOS flats completed but yet to be put up for sale is around 10,000.