H.K. to resume public housing sales after 10-month halt

Asian Economic News, June 10, 2002

HONG KONG, June 5 Kyodo

Hong Kong will resume sales of subsidized public housing flats next month following a 10-month moratorium, the government said Wednesday.

But the number of units to be put on the market in the next 12 months will be limited to 4,900, Chief Secretary for Administration Donald Tsang told reporters.

The flats will be sold in two batches, with 2,400 units in September and 2,500 in April next year subject to market conditions, Tsang said.

''In drawing up this program, we have paid regard to the continuing fragility of the private residential property market in general,'' Tsang said.

The government is also trying to avoid competition between the public and private sectors, he said.

The government suspended subsidized public flat sales in September last year for a period of 10 months in a bid to support the sagging property market amid the sluggish economy.

Hong Kong's property prices have dropped considerably since their peak in 1997, with some falling as much as 60%.

Transactions of residential property saw a brief rebound at the end of last year and the beginning of this year, but slowed somewhat in February and March.

In its economic analysis for the first quarter of this year released last week, the government said sentiment was affected by renewed concern that rising unemployment would curb demand for flats, while an ample supply of new units was becoming available.

On Wednesday, Tsang said the number of public units for sale will be capped at 9,000 a year until the 2005-2006 fiscal year.

After that, the government will sell no more than 2,000 flats each year, he said.

The chief secretary, however, denied the government is trying to prop up the private property sector by cutting down the number of subsidized flats for sale.

''We are not bowed to vested interests,'' Tsang said.

''We are determined to keep the market as stable as possible and to restore the confidence that has been eroded by the wild fluctuations of the past,'' he said.

In the long term, the government will provide loans for more families to buy their own homes, rather than build and sell subsidized flats, he said.

Loan financing is preferable because it is more cost-effective and gives families greater flexibility in choosing the locations, sizes and types of flats they wish to buy, he said.

''It will not cause any overlap in the supply situation, unnecessary competition between the public and the private sectors,'' he said.

Yet the government has no plan to scrap the scheme of public flat sales, he said.