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Hong Kong housing

First private property sale in Hong Kong takes a hit after cheaper housing measures are announced

Lukewarm sales at Enchantee project in Mong Kok reflect dampened market sentiment at prospect of more affordable subsidised housing on offer

PUBLISHED : Saturday, 30 June, 2018, 3:47pm
UPDATED : Saturday, 30 June, 2018, 11:15pm

Homebuyers on Saturday were lukewarm about the first new private property sale after the government announced a basket of measures to provide more affordable housing, reflecting dampened market sentiment.

Developer Success Universe Group managed to sell only about 40 of the 76 flats on offer at its Enchantee project in Mong Kok, as market watchers attributed it to the early impact of Chief Executive Carrie Lam Cheng Yuet-ngor’s bid to address widespread demands for cheaper homes.

The new policy initiatives offering cheaper subsidised flats could take effect as early as October alongside tougher resale restrictions, Secretary for Transport and Housing Frank Chan Fan said on Saturday.

He took to the airwaves to further explain Lam’s six measures to boost home ownership. One of them will make subsidised flats available at a discount equivalent to about 48 per cent off the market price instead of the current 30 per cent.

Chan said the Housing Authority was considering increasing resale restrictions on subsidised flats amid concerns that buyers would flip them for investment.

The authority would discuss the matter in greater detail, including ways to implement the new measure, at a committee meeting in mid-July, he said.

But Chan disagreed with imposing a total ban on the resale of the subsidised flats, explaining that “sometimes families and individuals need to resell”.

At present, owners of such flats must hold them for at least five years and pay the government back the land premium when they sell them in the open market.

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Flats costing HK$4 million and below proved to be the most popular during yesterday’s property sale at Enchantee. One buyer reportedly spent a total of HK$12 million to HK$13 million on three flats priced at around HK$27,000-HK$28,000 per square foot.

Market watchers said the aggressive pricing kept buyers at bay, just a day after the new measures were announced.

Chan Wing-kit of Centaline Property said providing cheaper subsidised housing was likely to put pressure on developers selling small- and medium-sized flats in the private sector.

At a special meeting of the Housing Authority’s subsidised housing committee on Friday night, members initially agreed to implement the new subsidised housing pricing policy for three projects that were first opened to applications from March to April.

The projects – in Cheung Sha Wan, Tung Chung and Kai Tak – have already drawn nearly 150,000 applications, and more competition is expected when the process is repeated in October.

“Some people may be unhappy, but I believe such feelings can be compensated with the price reduction,” committee member Lau Chun-kong said.

The other initiatives Lam announced on Friday were: imposing a vacancy tax equivalent to two years of rental income on empty new flats; reallocating more land originally earmarked for private housing to build public flats; inviting the Urban Renewal Authority to build starter homes at Ma Tau Wai; imposing more stringent conditions on developers’ sales of uncompleted flats; and forming a task force to drive temporary housing projects launched by community groups.

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Responding to criticism that the proposals were not enough to cool the red-hot market, housing minister Chan said such concerns were off-topic. The aim was not to bring down prices but to boost the supply of subsidised flats, make them more affordable and encourage more timely supply of first-hand private flats, he said.

Increasing the city’s overall housing supply would need to be achieved by increasing land supply, he added, suggesting reclamation as a fast and cost-efficient option.