Hong Kong Chief Executive Leung Chun Ying has pledged to increase the supply of new homes in the territory, while dismissing calls by developers to ease property curbs as prices are still too high, reported Bloomberg.
“We should continue to tackle the housing problem head-on and must not concede,” said Leung in his annual policy speech to lawmakers, adding that rentals and prices are “still beyond what people can afford”.
Notably, the target for new public housing supply has been raised to 97,100 units in the next five years from 77,100 previously. Private developers, on the other hand, are expected to release 87,000 new units over the next three to four years.
During the last three years, the Hong Kong government has doubled stamp duties, tightened mortgage requirements at banks and introduced a special tax on non-resident buyers following a surge in property prices. The city saw prices peak in September 2015, increasing by 160 percent from December 2008 – making it the most expensive place to own a home in the world.
With concerns of rising interest rates and the slowing economy sapping demand, prices began to fall in Q4 2015, dropping by 7.5 percent. CLSA Ltd Head of Property Research, Nicole Wong, expects the price decline to accelerate to eight percent this quarter as developers engage in a price war.
But she expects Leung to change the policy within six months if prices fall by 15 percent.
“Any correction should not destabilise society,” said Wong. “If prices fall 15 percent in six months, the government would have to start a policy action.”
The Hang Seng Properties Index, which tracks the performance of 10 real estate firms, has fallen 8.3 percent in the year to date.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
