Temporary suspension of restrictions draws flak as property prices keep rising

Restrictions on the size and number of apartments to be built in some land sales must be maintained to stabilize Hong Kong's supply of small- to medium-sized apartments, real-estate experts argue.

The remarks follow an announcement by Secretary for Development Paul Chan Mo-po in March that the restrictions, which had been in force since 2010, would be temporarily suspended, saying they had become unnecessary after the market had reacted positively to the curbs.

Chan, however, has failed to get property analysts to his side.

"The restrictions on the size and number of apartments to be built will ensure a steady supply of small- to medium-sized units in future, and avoid an excess stockpile of larger units in the market," said Victor Lai Kin-fai, chief executive officer of Centaline Professional Services Ltd.

The land sale criteria in the government's land tenders concern the minimum number of units, as well as the smallest and largest floor areas of units to be built, as specified under the conditions of sale, and successful bidders must abide by the terms.

The government began imposing conditions on the size and number of apartments to be built as part of its land tender conditions in late 2010. As of the end of last month, 49 land lots had been sold under such restrictions, accounting for 42 percent of 117 residential lots sold during the period.

Among 27,000 apartments to be built under these restrictions, 25,500 units, or 94 percent, will be small- to medium-sized apartments that are mostly located in the New Territories, according to data compiled by Centaline Surveyors Ltd. These units will have to be less than 750 square feet in area, according to the government's definition.

Apart from the units that have already been sold, plus those to be offered by MTR Corp, a total of 30,200 small- to medium-sized units will be released in the next five years - about 6,000 annually.

However, they might not be sufficient to meet the demand. Between 2010 and 2014, about 7,300 such apartments were sold in the primary market each year, while the number of similar units sold in both the primary and secondary markets took up nearly 80 percent of the city's overall residential transaction volume each year.

"The government's move to release more land and impose restrictions on some of them has increased the supply of small- to medium-sized apartments in the primary market in recent years. At the same time, the series of cooling-off measures have diminished the market's purchasing power in the secondary market," commented Louis Chan Wing-kit, chief executive officer (residential) for Asia Pacific at Centaline Property Agency Ltd.

As such, he thinks it's still necessary for the government to consider keeping these curbs in land sales as the growing popularity of new residential projects, as well as prices of secondary apartments, are still rising, testifying to the market's need for small- to medium-sized apartments.

agnes@chinadailyhk.com

(HK Edition 05/28/2015 page8)