May 2017 - More Property Cooling Measures

[East_coast]

The irony that you use a government compiled list leaves me chuckling. By 2016, 63 of those plots have been released to the Town Planning Board. You claim that the government doesn't do enough, yet you point out a list that they compiled.

The list was published at the behest of Legco. It was not published openly by the government they were asked for the information and provided it.

This is just the quantity that is being developed. I recall a paper saying their is over 500 hectares of land allocated to residential development. Obviously the government does not publish this kind of information.

[East_coast]

Where's the evidence for that?

Forget stray cats, Mr Tsang, slap a tax on HK's empty flats | South China Morning Post

[Viktri]

Do you live in Wong Chuk Hang? Your description of your home sounds like mine. My building is sandwiched between the water & a mountain (with water/mountain view looking out towards jumbo) - no potential for new buildings

I do agree with you regarding quality of life (noise/light pollution) but I think whether the macro QoL decreases has much to do with how policies are implemented ie: where will the new structures be built, in what manner, and will they be built in a rationale fashion.

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The way that I see it, it is definitely true that creating more flats does not mean that housing prices will go down. For example, HK adds more flats but net immigration changes (for whatever reason) = possibly more people needing housings that new flats being available. So I don't think adding flats is necessarily going to work.

However, if HK does not add new flats, housing prices are very unlikely to fall (I won't say impossible, another SARs incident could occur). So I think that HK should add new flats because there's the possibility that housing pressures will ease. But they need to do so in a proper and non-dumb way.

[Elegiaque]

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This means, to me, that a Hong Kong asset is creating a hell of a lot of wealth for this development company out of the pockets of hard-working citizens who want to buy a place to live.

After listening to an elected government official with property development interests saying this development is coming "whether or not you like it"; and hearing a government official from the Development Bureau whining in front of an audience of indigenous villagers (who are profiting individually with millions from their privileged ability to build small houses) that we need to get government money to support their plans because we need to help those in caged houses, I've just come to believe the whole property market in Hong Kong is a stinking, rotting business backed by greed that doesn't have a single drop of interest in improving the quality of life for average Hong Kong citizens, either by providing more space or bringing down the prices.

It is all about how to maximize profits, and the government has the backs of the major property tycoons. The government simply does not want the prices to be lower, and it is not at all a simple equation of "build more and therefore prices will be less" -- or perhaps if it is, that is exactly what these people with interests in profit don't want to happen. But Hong Kong is not alone in this problem, as the wealth of 1 billion people, who want out​ of their own country, grows.

The land is there, and yes it is very precious, so how it is utilized should be treated very carefully and not be seen as a profit-making tool, but rather a tool for democratically providing a decent living space for residents, especially those with no choice of anywhere else to go (e.g. HK residents who do not hold other passports). This could be done with a government which has a backbone through policies and careful planning...

[TheBrit]

I've just come to believe the whole property market in Hong Kong is a stinking, rotting business backed by greed that doesn't have a single drop of interest in improving the quality of life for average Hong Kong citizens, either by providing more space or bringing down the prices.

You've never spoken a truer word.

[civil_servant]

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[East_coast]

Original Post Deleted

The housing market is an effect of policy.

"The government’s failure to cool the market means the city’s economic health is getting more intertwined with real estate. Soaring prices means more wealth is tied up in property, and citizens are less inclined to amass other types of savings, said Lam of Shanghai Commercial Bank"

[shri]

Soaring prices means more wealth is tied up in property, and citizens are less inclined to amass other types of savings, said Lam of Shanghai Commercial Bank"

Well, they are also forced to invest in MPF funds.

[civil_servant]

Original Post Deleted

That's what I gathered from the article as well. The main causes were macroeconomic conditions that had a large impact on Hong Kong. First, there was the chaos from the financial crisis, and then the flood of money due to monetary policies in the US and fiscal policies in China. Considering how many financial experts/analysts/institutions have been wrong about the market in the past 5 years and even people admitting on the forum how they've been wrong over and over again, I think it's not fair to say that we can solely blame the government.

Take Terry Wong's case into account. He went to the bank and the HKMC to get a loan. Unfortunately, he does not qualify because he doesn't have the 20% down payment. The reason mortgages have been restricted is due to the fact that the government sees risks in the market. They're pretty much telling Terry Wong that he shouldn't get into buying property due to the downside risks, which is based on calculations done by experts. Terry Wong thinks he knows better. He believes that “With my parents’ money, I could be more financially flexible in the future.”, even though the government just told him that he's taking on major risk that could actually jeopardize his financial future and the savings of his parents. It's this kind of thinking that the developers exploit by offering their own mortgages to these individuals. Now, @East_coast comes around and tells us that instead of telling Terry Wong that he's an idiot, that we should give preference to people like him and penalize and blame others in order to supply more people like Terry Wong who "needed a place to live", even though at this stage it's possible for him to rent without any financial setback at very little risk. In actual fact, Terry Wong is already receiving preferential treatment, lower stamp duty, better mortgage term because he's a PR purchasing his first property, etc.

Thus, at this stage, I think it's perfectly reasonable to wait it out a few years and to observe the impact of changes in macroeconomic conditions, higher rates of interest, crackdown on mainland money outflows, etc, while working to steadily increase the supply of private and public flats. I do agree though that looking into reforming the small house policy and dealing with empty flats should be tackled (even though vacancy rates in small flats is negligible), but these should be middle- to long-term policies that involve the consultation of all the stakeholders involved, and not reactionary measures that will just create new problems in the future. The reactionary macroeconomic policies taken post-GFC had to be done in order to stabilize the panicked market, but as we can see, reactionary policies do have major downside risks. In the current environment reactionary policies are unjustified.

[East_coast]

@East_coast comes around and tells us that instead of telling Terry Wong that he's an idiot, that we should give preference to people like him and penalize and blame others in order to supply more people like Terry Wong who "needed a place to live", even though at this stage it's possible for him to rent without any financial setback at very little risk. In actual fact, Terry Wong is already receiving preferential treatment, lower stamp duty, better mortgage term because he's a PR purchasing his first property, etc.

Where? This is just a dictionary fabrication.

To follow-on from the Asset Inflation issues I would suggest the following pressures on inflation

1) Downward for Products - The Internet
- Allowing consumers to find deals driving unprecedented changes in consumer behavior
- Allowing knowledge transfer at an unprecedented rate allowing innovation and savings

2) Upward for Assets - Printing money
- Money flows into easily purchasable assets
-- Housing
-- Equities

So I agree global trends have allowed the successful printing of money without massive inflation of consumer products while allowing assets to inflate. It makes politicians and bankers look and feel good.

Hong Kong is an extreme case because land supply has been restricted and is still being restricted. The HK have identified plots of land to satisfy demand until 2030. There is enough land they just don't release it.