Carrie Lam must not lower guard on the city’s housing crisis
With property prices still way too high for most local homebuyers, it is hardly surprising that Carrie Lam Cheng Yuet-ngor was grilled on the subject by lawmakers in the last sitting of the current Legislative Council session.
It is good to hear that the chief executive would not rule out further tightening the curbs on non-local flat buyers to try and make homes more affordable following a 26-month rise in prices.
But if the previous similar restrictions are any guide, the effectiveness of more such measures remains to be seen.
It was only two weeks ago that the city’s leader rolled out a package of new measures aimed at tackling the problem. These included taxing vacant new private flats to speed up market supply and to delink government subsidised housing prices from the market rate. It is difficult to imagine that she would have other extreme measures up her sleeves.
Nonetheless, the government needs to be seen as resolute in tackling the problem. That is why she has rightly pledged to consider more options. Indeed, the prevailing socio-political circumstances make a strong case to seriously consider further tightening restrictions on non-local buyers. The Sino-US trade war has made the yuan and stock market more volatile, prompting more cash-rich investors from the north to seek refuge for their wealth across the border. An influx of hot money from the mainland does not bode well for the already overheated property market. The chief executive’s new housing measures will not boost supply overnight. Nor will they help rein in runaway prices.
It is incumbent upon the government to get prepared for the shock waves triggered by a possible surge in home purchases by mainlanders. Five years ago, former chief executive Leung Chun-ying made a controversial step to restrict the sale of individual housing sites to locals only. While it raised questions over Hong Kong’s mantra as a free economy, it was generally seen as a necessary step to defend the interests of local buyers.
Overall, non-local individual buyers only accounted for 1.3 per cent of the 69,260 transactions in the first and second residential market last year, down from 3.9 per cent in 2012. That decline shows that the series of cooling off measures, such as charging an extra 15 per cent for non-permanent residents and corporate buyers, are paying off, although the effectiveness still leaves much to be desired.
We must not lower our guard. A responsible government needs to adjust policies in response to the external challenges from time to time. The possibility of introducing more cooling measures must not be ruled out.