Putting the brakes on soaring property prices
Updated: 2010-10-09 06:57
By Oswald Chen(HK Edition)
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With Chief Executive Donald Tsang due to give his 2010-11 Policy Address on October 13, many people are eagerly awaiting to hear what measures the government will take to tackle soaring property prices.
It is widely anticipated that the government will take a few steps such as increasing land supply and giving a kick-start to home ownership subsidies, including the resumption of the Home Ownership Scheme (HOS). It is also expected to launch a "rent-to-buy" program.
The anticipated scheme would allow local residents to rent publicly owned flats and use the rent paid as a downpayment for the future purchase of the flat.
However, home owners and tenants China Daily spoke to have different expectations when it comes to the upcoming Policy Address.
"I don't expect the government to have either the capability or the intention of introducing drastic measures to cool down the property sector as it would only infuriate the developers," said Andrew Wong, 40, who is a tenant on a public estate flat in To Kwa Wan.
"The developers are aware that the government's bottom line is to make sure the property market does not have a severe downturn," Wong said. "So they really don't worry that the government would ever launch drastic measures to cool down the property market."
Wong criticized the "rent-to-buy" program however, saying that it will only increase speculative activity rather than enhance home ownership.
Sam Chan, a financial services manager in his early 30s at a brokerage firm in Sheung Wan, said that the only way of alleviating soaring property prices would be to build more public estates and resume the HOS program.
"The 'rent-to-buy' policy would be useful in that it would convey a message that local residents have the right to buy a home," he said.
He also felt that even the launch of more land auctions would do little to calm the property market as the government is maintaining its high land premium policy.
Stephen Chan, in his late 20s, recently bought a 500 square meter flat in Diamond Hill as he is planning to get married next year. He doesn't think resumption of the HOS policy will do much to encourage home ownership as it will take three to four years before flat supply is adequately increased.
However, he's much more keen about the "rent-to-buy" proposals. "It can help because many people have the ability to make the monthly mortgage payments - they just lack the lump sum needed to make the initial downpayment," Chan said.
Property consultant Jones Lang LaSalle (JLL) told China Daily that the government should not resort to "very harsh" measures to rein in property prices. "Regarding land supply enhancement, the government can adopt the following four measures: accelerate the conversion of industrial areas into residential ones, launch larger size land parcels for auction, resume regular land auctions and liaise with the Urban Renewal Authority to speed up the process of urban reconstruction," said JLL's Joseph Tsang, international director and head of capital markets Hong Kong.
However, Tsang said that more severe measures to curb property speculation are unlikely to be adopted in the Policy Address. These would include the levy of stamp duties, a capital gains tax, tightening of downpayment ratios, or restricting foreigners from buying local property.
China Daily
(HK Edition 10/09/2010 page2)