The Hong Kong government is to closely monitor the residential property market which is fears is in danger from a price bubble.
It may even release more land to deflate prices, according to Donald Tsang, the city’s chief executive.
His warning comes just after Henderson Land Development revealed that it sold a duplex apartment for HK$439 million, a record price.
‘The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in purchasing a home, and the possibility of a property bubble,’ Tsang told the Legislative Council.
‘The government will closely monitor market changes in the coming months.
When necessary, we will fine-tune land supply arrangements with a view to quickening the pace of bringing readily available residential sites to the market,’ he said.
Demand for property has surged this year, particularly for luxury units, putting pressure on the government to free up more land, which it tightly controls.
The government has not held any residential land sales for around 18 months.
Strong demand from wealthy mainland Chinese buyers, who account for around 11% of sales, is driving up prices according to Nomura. ‘Strong liquidity, low supply, strong external demand and aggressive mortgage lending are creating ideal conditions for another housing bubble in Hong Kong,’ said Nomura property analyst Paul Louie.
Last year, the fewest apartments were completed since at least 1972. Prices, especially for luxury homes, have rallied in 2009 on record-low interest rates and an influx of money from China.
The government is Hong Kong’s biggest provider of land and has altered supply to support or depress prices.
Tsang is probably also concerned that a luxury real estate boom could hike up prices in the affordable housing sector.
‘He’s more concerned whether mass-market housing prices would get pulled up by the momentum in the luxury market.
If that happens it will become a social issue,’ said Wong Leung-sing, an analyst with Centaline Property Agency.
Tsang also announced policy changes aimed at promoting the redevelopment of old industrial buildings, which have fallen into disuse as companies use cheaper factories in China instead.
