Measures revealed by Chief Executive Carrie Lam Cheng Yuet-ngor to cool the property market could exacerbate any downturn that may loom over the city as they come amid rising interest rates and at the latter stages of the current market cycle when the risks are high, according to JLL. “When the market does turn, all these cooling measures introduced in recent years could exacerbate any downturn, leading to a market free fall,” the property consultancy said. The predictions came after transactions of used homes in 35 major private housing estates fell to 45 last week, the lowest in 19 weeks, with no transactions in 16 estates, according to Midland Realty. And prices of lived-in homes, although they rose for 26 months in a row, slowed down to 1.67 per cent in May from 1.76 per cent in April. One-month Hibor, or Hong Kong Interbank Offered Rate, a commonly used rate for mortgage, peaked at 2.125 per cent late last month. Lam revealed a series of measures aimed at providing more affordable housing late last month, including a tax against vacant flats and requiring launches of developments with new pre-sale consent to offer at least 20 per cent on the market each time. JLL noted that an increasing number of buyers have been relying on developer financing, which charges higher interest rates and require no stress test on buyers. “In a market correction, developers could also be in trouble given high holding costs associated with the vacancy tax,” JLL said. The consultancy also said developers were likely to build even smaller flats to reduce the extra risks arising from the new tax by keeping lump sums affordable and maintaining high rates of sales. “The average size of units under construction has already decreased by 40 per cent from 1,022 square feet in 2013 to 600 sq ft so far this year.” Meanwhile, Joseph Tsang, managing director at JLL, advocated the use of the brownfield sites – homes, car parks, etc – scattered around the New Territories, which spans 760 hectares, or the size of 40 Victoria Parks, to boost land supply. “About 71 per cent of brownfield sites are under planning and already earmarked by the government for potential development,” Tsang said. “Brownfield sites will be a more effective and faster option for generating land supply than through land reclamation.” JLL said the growth in local housing prices will ease in the second half to between 2 to 7 per cent after rising 8.6 per cent in the first half.