Housing policy revamped to stabilise market
Thursday, November 14, 2002
scmp.com
JIMMY CHEUNG
The government has launched a sweeping revision of its housing policies in a bid to revive Hong Kong's sluggish property market.
A set of nine measures were announced yesterday, the highlight of which is that regular land auctions - once the backbone of government revenue - are to be scrapped. Auctions initiated by applications from developers will be the sole method of land disposal after 2003.
Moreover, the subsidised Home Ownership Scheme will "cease indefinitely". Officials say they hope this will send a clear message to the market that intervention will henceforth be kept to a minimum.
Announcing the nine-point package yesterday, Secretary for Housing, Planning and Lands Michael Suen Ming-yeung said he hoped confidence in the property market would be restored and speed up the economic recovery.
"We have gone back to basics. We are not just trying to address one or two problems," he said.
"Our conclusion is that we should not get involved in various aspects harmful to the economy. We believe that we have now cleared the field to enable the market to function more properly.
"There is now a clear understanding of the role that can be played by the private sector, without fear that there is a one-off opportunity that the government will step in and interfere. I hope that this time the market will respond positively," he said.
Mr Suen would not be drawn on whether the measures aimed to push prices up, saying it was up to the market to respond.
Under the package approved by the Executive Council, two land auctions scheduled for before April will be cancelled so that 50,000 private flats up for sale could be absorbed by the market.
Mr Suen said he was sure the action was necessary. "We believe there is a need for the government to bring forward extraordinary measures. Our aim is to restore public confidence in the property market as speedily and effectively as possible."
Without further revenues from the HOS and land sales, Mr Suen admitted the measures would hit both the government's budget deficit and the Housing Authority's finances. But he said the rewards of a more vibrant economy would make up for it.
Public housing will not be abandoned entirely, as Mr Suen said the government would still produce around 20,000 to 30,000 public rental housing units in order to keep the waiting time around three years. A new interest-free housing loan scheme will be provided, but without pre-determined quotas.
On Chief Executive Tung Chee-hwa's target of achieving 70 per cent home ownership by 2007, Mr Suen said ownership was a personal choice and therefore it was unnecessary to hang on to the target.
The government's measures drew support from the two railway corporations, whish are key suppliers of flats. The MTRC and KCRC have agreed that no railway property development will be put up for tender next year.
When asked if housing policy would sway again if the package proved to be ineffective, Mr Suen said: "We have done all we can without reservations. Now that we have made a clear policy statement about our role, we believe that the chances of similar things happening again would be very small."
Mr Tung, who spoke earlier in the day, said the measures were aimed at reviving public confidence in the property market and helping in the process of economic recovery and restructuring.
He said recovery had been hampered by persistent deflation, of which the slump in property prices was a major cause. "It is essential to break this vicious downward spiral," he said.
Political reaction was mixed. The Democratic Alliance for Betterment of Hong Kong and the Liberal Party backed the government package, while the Democrats expressed worries that the budget deficit would worsen.
Ratings agency Standard & Poor's was unimpressed, saying the reduction in land supply would take years to have an effect on housing production levels |
