Hong Kong is bracing itself for a new housing policy after Leung Chun-ying takes up his role as chief executive on July 1, but analysts believe change will be progressive rather than draconian, with a view to tackling the deeply rooted problems of the property sector.
With increasing pressure for more government intervention to rein in sky-high prices, all eyes will be on the new chief executive and how he is going to introduce housing initiatives that will help people achieve home ownership and improve their living conditions. This will be no easy task. While controlling runaway prices is a priority, everything should be done in a rational way so as not to jeopardise the fundamentals of the market.
Raymond Ngai, head of Greater China property research at Bank of America Merrill Lynch, points out that stability will probably be the theme of the government's housing policy under Leung, adding that no government would like to 'kill' off the market.
'Right now, 52 per cent of Hong Kong households already own their own homes,' Ngai says. 'I think it is not the policy of the new chief executive to introduce very tough policies with a view to pushing prices down. Governments like to see property prices stable instead of boom and bust in a cycle. I think the intention of Leung's policy may be to maintain stability.
'As Hong Kong property prices have already gone up a lot, it would make sense to let prices stay at current levels and for household incomes to increase steadily over time. The government may increase housing supply to prevent prices going up further.'
Lying ahead is a host of thorny issues for Leung in public and private housing sectors. Average private housing prices have breached the previous 1997 peak and reached a record high after new waves of buying sprees this year, igniting more worries about the affordability gap and about how first-time buyers can afford to own their homes.
As were highlighted during the chief executive election campaign, the major directions of Leung's housing policies include formulating a long-term strategy, conducting regular assessments of demand, ensuring adequate supply of land, building more public rental housing and assisting middle-income households to buy their own homes.
