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Unformatted text preview: Thursday, September 26, 2002, South China Morning Post We'll force up flat prices: Leung
Fresh round of intervention planned as market hits 10-year low The government has indicated it plans to intervene in the property market to try to push up prices in an effort to drag Hong Kong out of its economic slump. It is understood major options under consideration range from suspending the sale of Housing Authority flats and restricting land supply, to reducing stamp duty and boosting tax concessions. The Housing, Planning and Lands Bureau is expected to release a report into how to arrest the market's decline - which has seen prices hit 10 -year lows - as early as next month. Financial Secretary Antony Leung Kam-chung, speaking at the Forbes Global CEO conference at the Grand Hyatt yesterday, said Chief Executive Tung Chee-hwa was studying ways to boost prices. Mr Leung said: "It is rather difficult for the government to push up the market. But there are some measures we can take and the chief executive is thinking about this. "Right now we are on the downward trend. I think there will be a lot more short- term pressure." Suggestions of a fresh round of intervention in the property market emerged on Tuesday night after Mr Tung said at the same conference that he hoped to "help push [the market] up a bit". Mr Leung blamed plunging flat prices for Hong Kong having experienced deflation for 46 straight months. He said flat prices had dropped by 65 per cent from their peak in 1997. Credit-rating agency Standard & Poor's on Tuesday predicted home prices could decline by another five to 10 per cent over the next 12 months. The projections are in contrast with comments by property tycoon Li Ka-shing who said on Monday he believed prices had bottomed out. Fellow tycoon Stanley Ho Hung-sun also said last night he thought prices had hit bottom. The Hong Kong economy has shrunk by 12 per cent over the past 4.5 years, and half of that has been caused by falling property prices, according to official estimates. At a Forbes panel discussion, Mr Tung said the government was looking at ways to stabilise the market and "if possible to help push it up a bit". "We have the intention. We have the desire to do this. Now the question is to find the right way of doing it," said Mr Tung, who conceded previous measures had not been successful. The government last year banned the sale of Housing Authority flats for 10 months. Sales were restricted to 9,000 new Home Ownership Scheme flats a year after the ban was lifted in July. Secretary for Housing, Planning and Lands Michael Suen Ming-yeung said the government was aware of public concern over falling property prices. "We are seeing if we can [complete the study] to announce the government views on housing policies as soon as possible," said Mr Suen in a TVB interview last night. News of fresh intervention was welcomed by the property sector, although critics warned the move could distort the free market. Real Estate Developers' Association secretary- general Louis Loong Hon- biu said: "The government finally knows that stabilising the property market is stabilising the economy. "Hong Kong has over one million property owners. If they see the values of properties keep falling, they will not want to spend and this will result in a fall in domestic consumption." But legislator Frederick Fung Kin- kee, of the Association for Democracy and People's Livelihood, condemned the government for intervening in the market. "It will distort the operation of the market and give false hope to home- buyers," he said. Housing expert Dr Yip Ngai-ming, an assistant professor at City University, urged the Housing Authority to scrap its programme to sell 25,000 public rental flats a year to existing tenants. "The scheme discourages well-off tenants from going to buy homes in the private market." However, authority member and property consultant Michael Choi Ngai- min doubted if further government intervention could work, because of the gloomy economic outlook. He also said scrapping the sale of public housing flats might not be much help because public tenants might not be able to afford private units. 2 Thursday, September 26, 2002 Developers and analysts propose radical solutions
SOPHIA WONG and RAYMOND MA Analysts and developers have come up with a range of extreme suggestions - including spending public funds on luxury flats - as the government looks for w ays to boost housing prices. However, price-slashing continued yesterday. Wharf (Holdings) released the first batch of units at its Bellagio project in Sham Tseng at 10 per cent below the cost of comparable flats on the secondary market. Wharf assistant director Ricky Wong Kwong- yiu said: "It seems that the government is no longer rejecting the need to push up the market." He suggested the government use its investment funds to buy quality properties. It could also reduce stamp duty or provide more tax breaks to buyers, he said. ABN Amro analyst Anton Kwang suggested shortening the pre- sale period - the earliest point before completion at which developers are allowed to sell unfinished projects - to nine months from the current 20 months to cut the supply of flats. He also suggested a two-year land sale freeze. Midland Realty executive director Victor Cheung said it would be better to freeze sales of Home Ownership Scheme flats and public housing for two years, in addition to suspending land sales. JP Morgan regional property equity research analyst Douglas Sung said: "I think the government clearly understands [the problem] . . . but the question is whether there are any quick fixes . . . Personally I don't think there are any." 3 Friday, September 27, 2002 Property market 'medicine' begins
Housing secretary unveils plans for tougher eviction powers in attempt to boost sales of investment flats
PATSY MOY, SOPHIA WONG and RAYMOND MA The government has announced its first step towards boosting the property market, with landlords to be granted more legal protection to help encourage sales of investment flats. Housing Secretary Michael Suen Ming- yeung's announcement came after indications this week from Chief Executive Tung Chee- hwa and Financial Secretary Antony Leung Kam-chung that the government would try to push up property prices. The comments brought a clamour from developers for fast government action. In a television interview yesterday, Mr Suen said the government would seek to bring in a law next year to give more protection to landlords. "The current law does not really allow landlords to vacate tenants from their flats and find new tenants. So we hope we can give the flat owners more flexibility in this regard - that can help boost the property market," Mr Suen said. Mr Suen stressed that flat prices should be determined by market forces - but said the government should apply the "right medicine". He said the weak market was caused mainly by a lack of confidence among buyers, and the government would seek to improve the situation by mapping out a clear housing plan. "I have been asked how to push up prices. But I believe the market cannot be artificially maintained. Instead, we should let the market forces run at full strength," he said, adding "we should seek the right medicine for the market". Property stocks surged yesterday after the initial indications by Mr Tung and Mr Leung that the government was planning a fresh round of intervention. The top gainer was Sino Land, which picked up 8.2 per cent, while other big developers, including Sun Hung Kai (Properties), Cheung Kong (Holdings), Henderson Land and New World Development, all posted gains of more than four per cent. With their rallies, the property sub- index increased 4.6 per cent yesterday and outperformed the 1.6 per cent rise for the Hang Seng Index. Cheung Kong chairman Li Ka-shing welcomed the government comments and said many developers had already expressed their views to officials. 4 "To reverse the recession, you can't do anything if you can't solve the problem of falling property prices," he said. "The historic responsibility of the Home Ownership Scheme (HOS) is over. There are now many who have benefited from the scheme," Mr Li said, referring to the possibility that the government might suspend public housing sales to reduce the supply of flats. Cheung Kong said yesterday it would suspend the special offers it had been using to lure HOS owners and might raise the prices of 600 flats in four development projects by three to five per cent next week. Justin Chiu, executive director of Cheung Kong, said: "There is a lot the government can do - for example, it can review the policy on HOS and the policy on land supply . . . "We don't know their [the government's] schedule . . . we think probably they will announce some measures very soon." Sun Hung Kai chairman Walter Kwok Ping-sheung said of the government statements: "It is encouraging. It clearly shows the government's hope to stabilise the housing market and support a slightly upward price movement." Real Estate Developers' Association secretary- general Louis Loong Hon- biu said the association had suggested the government centralise land supply. Insignia Brooke International consultant Nicholas Brooke disagreed with the proposal and said: "The developers are capitalising on the government's weaknesses." He predicted the housing market could put the worst behind it by early next year. "Any government interference will confuse the market," he said. The Hong Kong Homeowners' Club, which represents landlords, yesterday welcomed news that the government might act on rental laws. About one in four private flats in Hong Kong are let out, it said. "Existing laws favour tenants, not the flat owners, and this imbalance clearly has a negative effect on flat prices," club chairman Shea Hing-wan said. 5 ...
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