Drop in Hong Kong property prices ‘could help young couples hunting for homes’ - South China Morning Post

A decline in Hong Kong property prices over the past two years could make it easier for young couples to buy their first homes, the finance chief said on Sunday, adding the market should determine the cost of housing as long as the city’s fiscal stability was not put at risk.

Financial Secretary Paul Chan Mo-po said local property prices had fallen 17 per cent between September 2021 and the same month this year, despite a mild uptick during the first quarter of 2023.

“However, trading volume has not been high. In fact, it can be said that it’s been lower than before, especially in recent months as people wait to see what measures will be included in the policy address,” he told a radio programme.

“In other words, there are no signs of panic or wavering in confidence.”

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The minister said prices had fallen from record-high levels after the market had made self-adjustments, which could make it “easier for newlyweds to buy property, and those who have children could move to larger flats”.

“As long as it doesn’t cause other financial and confidence risks, it’s appropriate to let the market adjust by itself,” he said.

During his policy address last week, Chief Executive John Lee Ka-chiu unveiled a raft of measures that relaxed curbs on property transactions for the first time in more than 10 years, in a bid to give the flagging local housing market a shot in the arm.

A special stamp duty, equivalent to 10 per cent of the home price, will be waived for owners reselling their property after two years, reduced from the original three years.

A buyers’ stamp duty for non-permanent residents, and another levy on additional properties, the new residential stamp duty, have also been halved to 7.5 per cent from 15 per cent.

Financial Secretary Paul Chan (centre) has expressed optimism that young people can make their first step on the property ladder amid a drop in prices. Photo: Handout

Chan on Sunday acknowledged that local property remained expensive and “unaffordable” for most people, and said it was important for authorities to continue their efforts to provide more subsidised housing.

Asked whether lower property prices would affect the government’s land revenue, a major source of income for public coffers, he expressed confidence in the city’s ability to overcome what he called “short and mid-term fluctuations”.

“When Hong Kong was experiencing good times, there were years when land revenue exceeded HK$100 billion [US$12.7 billion]. During some difficult times, it was as low as HK$10 billion. We have all seen it before,” he said.

“After so many generations of hard work, Hong Kong still has more than HK$700 billion in fiscal reserves. We are strong.”

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The finance chief also said authorities had offered land tenders based on market trends and there was “flexibility” concerning the lands’ usage.

“We previously experienced land failing to sell during tender when there were fluctuations in the market. Some of them were successfully sold when we put them up for tender again later on,” he said.

“Some others, we converted into land for subsidised housing instead.”

It was important that Hong Kong diversify its economy and continue to work on attracting more companies to set up shop in the city, he added.

“If they come, they will pay us taxes and provide more jobs. So I think the best approach for us is to seize such opportunities for our future development,” Chan said.

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The finance chief also published his weekly blog entry on Sunday, writing that economic growth was expected to be slower than originally estimated due to headwinds from geopolitical tensions.

He said the government would consolidate and make good use of the city’s strengths, pointing to plans outlined in Lee’s policy address to develop existing and emerging industries, including technology, healthcare and new energy transport.

City leader Lee echoed the minister’s remarks and told a television programme the local economy would still see positive growth, despite external factors such as high interest rates worldwide, geopolitical conflicts and supply chain issues.

He also stressed that it was not the government’s role to determine property prices and authorities instead aimed to help the public make their own decisions by having a clear understanding of policies and the local housing supply.

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Asked if the government would resort to further cooling measures if home prices surged, Lee said he would not offer any assessment of the situation as he did not wish to give the market any wrong signals.

The chief executive touched on plans to introduce national security legislation as required under Article 23 of the Basic Law, Hong Kong’s mini-constitution, and said the new law was intended to guarantee a stable and safe environment that was good for business, adding that human rights and freedoms would be protected.

“The national security law in Hong Kong and the Basic Law Article 23 legislation to be enacted … they are to ensure that we have a very steadily safe basis for businesses to invest in,” he said.

The city leader in his policy address last week announced that local authorities would enact the city’s own national security legislation next year.

Beijing imposed its version of a national security law on Hong Kong in June 2020 in the wake of anti-government protests to ban acts of secession, subversion, terrorism and collusion with foreign forces.

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