Financial Secretary John Tsang Chun-wah yesterday signalled the government is prepared to unwind steps to cool down the property market if prices continue falling. The euro-zone debt crisis and global slowdown have unnerved investors. Tsang said housing prices were 'slowly coming down'. The trend 'will continue for a bit and hopefully we will be able to achieve a soft landing', he told Bloomberg in South Africa. 'When the environment trends downwards, we will surely take countercyclical measures.' The city's biggest developer, Sun Hung Kai Properties, which yesterday raised its target for home sales in the year to June, called for an end to the cooling measures. 'Speculators have been eliminated by the curbs, and end-users now dominate our property sales,' it said. Tsang was coy about the timing of the government's easing of market curbs. 'Timing is a judgment call that I will have to make nearer the time,' he said. The comments drew a swift reaction. Lee Wing-tat, the chairman of the Legislative Council's panel on housing, said the latest cooling measures had only been in place for four months and it would be premature to lift them now. A government official later said Tsang's comments referred to tighter limits on loan-to-value ratios for mortgages imposed last year. Earlier in the day, housing secretary Eva Cheng said the government might review earlier than scheduled special stamp duties imposed last year. They were meant to last two years. Later, a spokesman said Cheng was only restating the government's existing position. In November last year, amid an outcry over the unaffordability of homes, special stamp duties were imposed on quick property resales - 15 per cent for sales within six months, 10 per cent for those within a year and 5 per cent for those within two years of a purchase. In June, the government cut the maximum amount banks could advance on a mortgage loan for homes valued at more than HK$10 million by 10 percentage points to 50 per cent of the property's value. For properties of HK$7 million to HK$10 million, the loan-to-value ratio was lowered to 60 per cent, from 70 per cent. Home prices in the secondary market have fallen by 3.5 per cent from their peak in May, according to data complied by Centaline Property Agency. Home prices soared 75 per cent between January 2009 and May this year. 'If I were the government, I wouldn't have made those comments just yet. They should have waited until home prices fell further,' said Simon Lo Wing-fai, an executive director of research and advisory for Asia at Colliers International. He said the remarks would only cause confusion over government policy. Lee Wee Liat, regional head of property research at Samsung Securities (Asia), said the government must be ready to cushion the market against a sharp fall. 'When prices start to correct, there's always a danger of overshooting on the downside as weakening investor sentiment feeds on itself, intensifying any downward price spiral,' he said. Chau Kwong-wing, a professor at the University of Hong Kong, also said it was too early for the government to lift the property curbs. 'It's still uncertain how the European financial crisis will affect the property market. Properties could still be an option for investors in a low-interest-rate environment,' he said. Abrupt changes would give an impression the government was weak. Lo said speculators, who left the market after the property curbs were imposed, would return if they were lifted and prices would rise.
