Economy

Hong Kong to increase land supply to curb assets bubbles

(Xinhua)
Updated: 2011-02-23 14:44

HONG KONG - Hong Kong will increase the land supply for both the  private housing development and the public housing, to reduce the risk of a property bubble posed by excessive liquidity and exceptionally low interest rates, said Hong Kong's top financial official in his annual budget speech on Wednesday.

A challenge for Hong Kong in 2011 will be the risk of asset- price bubbles, and the most effective solution to the property- market problems was ensuring steady and adequate land supply, John Tsang, financial secretary of the Hong Kong Special Administrative Region (HKSAR) government, told the Legislative Council.

"We are determined to maintain the stable and healthy development of the property market and will continue to monitor closely the market situation. I will not hesitate to take further actions to safeguard our socio-economic and financial stability when necessary."

He announced new measures to increase land supply that will see specifying in the Application List four residential sites initiated for sale by the government in 2011, and a further five sites added to the list specifically for the construction of small and medium-sized apartments.

The total number of residential sites available for sale next year is 52, including 18 new sites and 34 sites rolled over from last year's Application List, which will altogether provide about 16,000 residential apartments, an increase of more than 70 percent over the 9,000 apartments provided in 2010-11.

The housing land available in the coming year will provide a total of 30,000 to 40,000 private residential apartments, far exceeding the target of an annual average of 20,000 apartments.

In the five-year period starting from 2010-11, the forecast production of new public rental housing apartments is about 75,000 apartments.

To relieve the pressure faced by the sandwich class in home purchase, the HKSAR government will also launch the My Home Purchase Plan with the Hong Kong Housing Society, with sites for a total of some 5,000 apartments under the plan already earmarked.

As for commercial buildings, the land available for sale next year includes sites that will provide a floor area of 600,000 square meters for commercial/business use.

Tsang said the government will also explore new ways to increase land supply, such as reclamation outside the Victoria Harbor and rock cavern development.

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About HK$300 million will be allocated to the Development Bureau to initiate public discussion about the feasibility of these new options in the next few years.

The US second round of quantitative easing measures announced in November last year has fueled the already buoyant property market.

The HKSAR government introduced three rounds of measures in February, April and August last year to ensure the healthy and stable development of the property market.

These measures have to a certain extent achieved the intended effects of increasing apartment supply, enhancing transparency in the property market, and preventing excessive expansion in mortgage lending, said Tsang.

Yet he noted that a preliminary examination shows apartment prices were up by two to three percent in January after falling 0.9 percent in December.