Hong Kong property market can be cooled if land sale terms are pegged to ready flat prices
Readers of the letters column would have seen a lot of suggestions made by correspondents for solving the city’s housing problem.
Suggestions such as developing brownfield sites, rezoning farmland and industrial land, building on the fringes of country parks, utilising the golf course and reservoirs, ending the small-house policy, developing the People’s Liberation Army barracks and unoccupied schools, and reclaiming from the sea will not have escaped the attention of the administration.
The common goal is to free up more land for housing development, so that waiting time for public housing can be shortened and property prices can revert to affordable levels.
However, the problem of steep property prices will not go away because of the exorbitant land cost.
Watch: Explaining Hong Kong’s housing crisis
Current stamp duty measures alone are not sufficient to tame property prices, which can only be reined in if they are pegged to the tendering process.
Future land sales should be divided into three categories: Category A for high-end residential development where completed units are sold to customers not sensitive to price; Category B for public housing, where flats are rented out; Category C for private housing, where flats will be sold to ordinary homebuyers at predetermined prices through a mechanism set in the tendering process.
When land parcels designated for private housing are put up for sale under Category C, a condition shall be imposed in that all tenders shall disclose selling prices on completion. Each tender may contain up to three bid prices for the same land parcel, so long as separate selling prices are disclosed at each bid price.
The tender that offers the most affordable selling prices will be the ultimate winner. The highest bid price will not necessarily win, unless it is accompanied by competitive prices.
Under the proposed land sales regime, the government’s revenue on Category C sales would be regulated at its own discretion for a firm grip on property prices.
Given the city’s abundance of reserves, the government is well placed to explore the Category C model for future land sales, which will cool private home prices in the long run.
Sam Wong, Chai Wan