Hong Kong budget: property cooling measures to remain despite developers’ calls for withdrawal

Lilian Cheng

Property cooling measures will remain in place despite some calls for their withdrawal as home prices are still beyond the means of people, Hong Kong’s finance chief says.

Paul Chan Mo-po made the comments after earlier on Wednesday revealing in his fourth budget speech that the government’s land sale programme would be able to provide just 7,500 flats in residential plots in the coming financial year, a 10-year low.

Over the past decade, the government introduced four different stamp duties – including the Special Stamp Duty to discourage short-term buyers or investors and a double stamp duty that placed a surcharge on non-permanent residents and corporate buyers – to cool the red-hot housing market, frequently ranked the world’s least affordable.

But with Hong Kong’s economy hit hard by the double whammy of the coronavirus epidemic and anti-government protests that had rocked the city since last June, pro-business lawmakers and developers had called for an easing on some duties, especially those targeting locals.

Financial Secretary Paul Chan did not touch on the property duties in his budget speech. Photo: Winson Wong

Chan did not touch on the property levies in his budget speech, instead responding to the demands in his post-speech press conference.

“The residential property market has been quiet since last June with transactions and prices retreating, but current flat prices are still out of people’s affordability,” he said.

“In such a situation, we do not think it’s a suitable time to make big adjustments. We have to stay firm when executing policies.”

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The financial secretary said that when there was a 9 per cent drop in property prices between September 2015 and February 2016, there were also demands for cutting the measures.

“We are not only taking into account the current situation, we have to look at the whole market trend and economic changes in the future. For the current economic situation, we are not qualified to withdraw the measures.”

Lawmaker Jeffrey Lam Kin-fung, of the Business and Professionals Alliance, said that although there were sweeteners to help small and medium-sized enterprises, some Hongkongers might need to generate quick cash by selling their flats.

“The government should further assist them by removing some of these property measures that have lasted for almost a decade,” Lam said.

Po Siu-ming, chief executive of Midland Realty’s residential division, said he was also disappointed with Chan’s decision, as the government should carry out measures such as cancelling the Special Stamp Duty to stabilise the market.

A government source said stamp duties that targeted speculators would not affect people who bought a house to live in, adding that there were no specific indicators on when to ease the measures.

Meanwhile, the land sale programme in the upcoming financial year will comprise a total of 15 residential sites, capable of providing about 7,500 flats only – another 10-year low like last year.

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But adding railway property projects, as well as private redevelopments, the potential land supply for the whole year could provide 15,700 flats.

“The number of flats provided in total is still more than the target set by the Long Term Housing Strategy, which was to provide 12,900 flats per year,” the government source said.

For a broader picture, it was estimated the private sector would, on average, complete about 19,600 homes annually from 2020 to 2024, a slight increase of 800 flats from the previous five-year rolling estimate.

The land sale programme will include commercial plots at Kai Tak. Photo: Felix Wong

The government will include six commercial sites in the land sale programme, which will be announced on Thursday, to provide about 830,000 square metres of floor area.

According to the government source, these plots will include Site 3 of the new Central Harbourfront, Queensway Plaza in Admiralty, Caroline Hill Road in Causeway Bay, which had been announced in previous years, as well as new sites at Kai Tak.

As for long-term land supply, Lantau Tomorrow Vision, a controversial project to build massive artificial islands as Hong Kong’s next housing and business hub, would continue, Chan said in his budget speech, adding the government was confident and capable of controlling the cost.

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Chiu Kam-kuen, international director for Greater China of property consultant Cushman & Wakefield, said home prices had only been slightly dented by the multiple impacts of US-China trade tensions, the social unrest and coronavirus outbreak.

“One can foresee that home prices will pick up strongly when the economy turns around and market sentiment improves once the pandemic is over,” he said. “The housing issue will then become an even bigger headache for the government.

“We urge the government to consider all possible options to address long-term land and housing supply.”

This article Hong Kong budget: property cooling measures to remain despite developers’ calls for withdrawal first appeared on South China Morning Post

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