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The government on Thursday sold two pieces of land for luxury residences with impressive results. It was yet another attention-grabbing occasion after the sky-high price fetched by a luxury residence on the Peak. The social issues more note worthy behind the scene are that the prices and rents of the small- and medium-sized flats in which the general public live continue to rise and the government is beginning to consider whether to set restrictions on the buyer's identity when launching fixed-size flats in future to help people without property ownership buy their first homes.
After the sale of a luxury flat on the Peak at an average per square foot price of nearly $100,000, a new high in Asia, the luxury residential sites at Borrett Road, Mid-levels West and Ping Shan, Yuen Long were sold on Thursday with the "flour price" close to the "bread price" of existing flats in the area. They were no doubt the centre of attention. To the citizens who basically had no means to buy a luxury residential flat, the psychological impact is larger than the actual impact.
The data more worth noting for the general public are the latest property price and rental indices released by the Rating and Valuation Department showing the overall property prices continuing to rise to a new high in history and the rental index nearing the 1997 high. In addition to the youngsters finding it harder to realize their home ownership dreams, even the rent burden is becoming heavier and heavier.
Sale restriction on fixed-size flats can help "first time home ownership" The government has repeatedly launched cooling measures, but property prices still soar. One of the factors is the large number of wealthy mainlanders entering the Hong Kong market with huge capitals.
Hence there are voices in society recently for banning the sale of flats to people outside the territory to curb property prices. But considering the fact that Hong Kong has always been "global" in its free market operation, such great change in policy must not be carried out in haste.
In contrast to a uniform restriction on purchases, people in the political sector narrowed the scope, suggesting that when fixed-size flats are launched in future, only first-time Hong Kong property buyers are to be allowed. Financial Secretary John Tsang Chun-wah on Thursday already promised to make further consideration in this direction.
The authority did not hesitate in sacrificing a bit of land sale revenue to launch fixed-size flats with a purpose of increasing small- and medium-sized flats to facilitate citizens in buying their first homes. It is not that Hong Kong has never implemented measures of restricting property buyers' identities before. The Home Ownership Scheme clearly required buyers to be Hong Kong people meeting asset and income requirements. The reason was that there was government subsidy. If fixed-size flats are implemented in future, it is believed that it will be further investigated along this thinking, to see if it can run abreast with the "optimized" Home Ownership Scheme of My Home Purchase Scheme, to help Hong Kong people buy their first homes through restricted purchase and resale.
As cash pursues property, fall in one type means rise in another In addition to helping some people buy their first homes, the citizens cannot expect this restricted purchase measure to become a panacea that will completely solve the problem of property prices. When the government launches units of fixed sizes only for Hong Kong people buying their flats for the first time, the eligible citizens will naturally benefit. But those ineligible citizens will still be affected by high property prices. Currently, property purchases of non-local people in Hong Kong are not dominated by small units. Restricting the identities of buyers will have no cooling effect on the overall property prices. Even if it is assumed that property purchases of non-locals include small units, once they are banned from buying fixed-size flats and their capitals shift, it cannot be ruled out that it will push up the prices of other properties.
The measure of selling fixed-size flats only to the locals will be most helpful to young people without any flats or those citizens who own flats and have children reaching the age of buying their own homes. But the public cannot expect to rely on this policy alone to completely solve the discontent caused by high-standing property prices.
Foreign funds' pushing up property prices has to do with global money supply and the rise of emerging market economies. Local people in cities with a lot of immigrants such as London of Britain, Vancouver of Canada and Sydney of Australia have shown regret in the difficulty in buying properties. Using fixed-size flats to help first-time buyers or Hong Kong people to buy flats can help some people in need. This is a practical limitation that has to be understood when considering the measure.


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