Not the right time to help those priced off Hong Kong property ladder as that is market meddling, finance chief Paul Chan says
- Finance secretary stands ground despite coming under fire from critics who say latest budget does little to tackle city’s housing crunch
- He argues that measures can come any time later, but it would be irresponsible to roll out policies now
Hong Kong’s finance chief has said it is not the right time for new measures to help residents priced off the city’s property ladder, even as critics slam his latest budget for doing little to ease the housing crunch.
Financial Secretary Paul Chan Mo-po said there were no immediate plans to loosen mortgage ratios or offer further concessions to first-time buyers, as it would be irresponsible and perceived as the government meddling in the market.
“We don’t want to, especially when property prices are still so high, help those with weaker financial ability hop on [the ladder] ... because if the market drops, they will be the first to be affected,” he said in a television interview on Sunday.
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“Another consideration is timing. On one hand, we don’t want to pour oil on fire in terms of the housing market. And on the other, we don’t want to give the impression that the government is propping up the market.”
We don’t want to give the impression that the government is propping up the market
Chan said such measures could be implemented at a later time, depending on how forces played out. “People may not have to wait for the next budget or policy address,” he said.
Since presenting his 2019-20 budget last week, the minister has been criticised for scrimping on relief measures, arguing instead for fiscal discipline and warning that the government would face a deficit next year if it shelled out all its projected HK$58.7 billion (US$7.5 billion) surplus for 2018-19 on sweeteners.
Lawmakers and residents have hit out at Chan, accusing him of not doing enough to address the city’s pressing housing issues.
On this matter, Chan acknowledged public concerns over affordability, with fewer private flats to be built over the next few years.
The government last year said it would increase the ratio of new public housing to 70 per cent of its supply target over the next decade, up from the previous 60 per cent.
The change would mean setting aside fewer plots for sale to private developers, possibly shrinking the supply of private homes and making it harder to rein in an already overheated property market.
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It would also reduce government revenues from land premiums – the administration is already predicted to rake in lower-than-expected earnings from premiums and stamp duties for 2018-19.
While this year’s land sales programme will contain just 15 residential sites, Chan said the government could rely on selling prime commercial sites over the next few years.
He said there was no need to look for new sources of tax revenue yet, but stressed the requirement to diversify the economy.
Also on Sunday, Secretary for Development Michael Wong Wai-lun conceded that even with the 70-30 public-private ratio tweak, it would not be easy to increase housing supply in the short term as developing land for flats was a lengthy process.
“You are putting something from your left hand, into your right hand. The government recognises that this is not a magic wand [that can increase supply] in the short term,” he said. “The real impact of the adjustment will emerge only in five or seven years.”
In the coming five years, 18,800 new homes are expected to hit the market each year on sites sold previously, a rise of 20 per cent from the past five years.
