Government's response to concern over property prices

In response to concern expressed today (October 25) over the high property prices, a government spokesman said:-

"The Government noted that the relatively small number of residential flats completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in purchasing a home, and the possibility of a property bubble.

The Government will closely monitor market changes in the coming months and where necessary, fine-tune the land supply arrangements.

Pursuant to the 2009-10 Policy Address, the Development Bureau has liaised with the MTR Corporation Limited (MTRCL) and Urban Renewal Authority (URA) to explore the possibility of quickening the pace of readily available residential flats to the market. Both MTRCL and URA will support this initiative as far as practicable.

There are various sources of land supply for residential purpose. Apart from the land available in the Application List and the property development projects of MTRCL and URA projects, another important source of supply is the private residential land through lease modification or land exchange.

In this regards, the Lands Department has implemented a series of measures to speed up the handling of applications for lease modification and land exchange.

The two New Development Areas in the New Territories etc. will also provide land for residential purpose in the long run.

Private residential flats and Home Ownership Scheme (HOS) flats are of two different markets. It is not the Government's policy to use HOS as a means to interfere with the prices of private properties. Property prices should be set by market forces and be adjusted by supply and demand.

In view of recent public concern about the release of information in the property market, the Transport and Housing Bureau will liaise with the Real Estate Developers' Association to identify feasible measures to enhance transparency in the release of information regarding uncompleted first hand residential properties.

Also, the Hong Kong Monetary Authority (HKMA) has put in place prudential measures for residential mortgage loans. For residential properties valued at $20 million or more, the loan-to-value (LTV) ratio will be capped at 60%. For properties valued at below $20 million, the 70% LTV ratio will be maintained, but the maximum loan amount will be capped at $12 million.

In the next few months, the government will continue to monitor closely the development and changes, including supply and demand, in the private property market. If deemed necessary, the Government will introduce measures to ensure the stability of the property market."

Ends/Sunday, October 25, 2009
Issued at HKT 14:01