Homes cooling measures here to stay: Chief Executive

Updated: 2015-12-09 07:56

By Oswald Chan in Hong Kong(HK Edition)

  Print Mail Large Medium  Small 分享按钮 0

Homes cooling measures here to stay: Chief Executive

The government introduced the last round of measures to cool the overheated market in February by raising the down payment rate from 30 percent to 40 percent for residential properties valued under HK$7 million. David Paul Morris / Bloomberg

Leung vows it is not the government's job to bring down property prices

Hong Kong's spate of measures imposed to tame runaway property prices will not be lifted for the time being, and it is not the government's business to ensure that prices won't fall, Chief Executive Leung Chun-ying pledged on Tuesday.

Speaking ahead of a weekly Executive Council meeting, he said such measures will be maintained despite a slight decline in real-estate prices and rents recently.

It's the government's job to solve the city's housing problem by increasing supply, he said, but it's not its responsibility to prop up prices.

"The government is determined to address the housing shortage by increasing land supply and curbing investment demand, speculative demand and overseas demand."

His remarks came as real-estate advisory firm DTZ/Cushman & Wakefield predicts that local mass residential homes prices will come down by between 5 and 8 percent in the first half of next year as an expected hike in US interest rates this month would have a direct impact on homes sales and market sentiment.

Home transactions in the secondary market fell to about 1,800 cases per month in the fourth quarter of 2015 - a level lower than those during the SARS (Severe Acute Respiratory Syndrome) outbreak in 2003 and the 2008 global financial crisis, according to DTZ/Cushman & Wakefield.

Buyers have been adopting a wait-and-see attitude with the looming US rate increase, while owners are reluctant to sell at deep discounts as their property-holding capability has improved under the ultra-low interest rate environment in the past seven years.

Developers, on the other hand, are keen to offload their projects in the primary market, offering discounts in terms of mortgage arrangement to attract substantial buying power. Secondary homes sellers may also be unwilling to offload their properties at huge discounts, giving rise to sluggish transactions in the secondary market.

However, there has been no significant drop in local property prices so far.

According to Knight Frank's survey of Global House Price Index for the third quarter 2015, Hong Kong's real-estate prices saw double-digit annual growth of 16.7 percent in the year to September this year.

"A US interest-rate rise will likely lead to Singapore's and Hong Kong's currencies being pulled upwards, hence lifting mortgage costs for existing and potential homes owners," Knight Frank's head of Research for Asia Pacific Nicholas Holt warned.

Alva To Yu-hung, DTZ/Cushman & Wakefield's Hong Kong senior managing director, is more optimistic, believing that local property prices will not tumble in the near future.

"Hong Kong's resilient economy and a low unemployment rate should support housing affordability and fuel the robust demand for homes," he said. "The pace of US interest rate hikes is likely to be gradual and slow so that it should not have a strong negative impact on the local homes market."

"We don't see the government easing those property market cooling measures too soon, just after home prices started to fall. The government will maintain these measures until increased residential apartment supply can be seen to have an impact on the market," To said.

The government introduced the last round of measures to cool the overheated market in February by raising the down payment rate from 30 percent to 40 percent for residential properties valued under HK$7 million.

oswald@chinadailyhk.com

(HK Edition 12/09/2015 page10)