As the Chinese housing market continues to "cool", the newly elected leader of Hong Kong has stated his intention to go even further to cool the Hong Kong housing market, by building middle-class housing for residents only. The statements come in response to an angry backlash against unlimited sales to foreigners which have caused house prices to soar.
The plan, according to Leung Chun-ying, who was elected as the Chief Executive of the Hong Kong territory last Sunday, is to sell land for developments that could only be sold to Hong Kong residents. All land in the Hong Kong territory is owned by the government, and is sold only on long leases.
"This will be residential land suitable for middle-class incomes," said Mr Leung, who takes office on July 1. "It's a political move to address sentiment in the market. It's not going to form the bulk of supply."
The Hong Kong housing market became famous through 2010 and 11 as becoming one of the priciest places in the world to buy property, with record breaking apartment prices becoming the norm rather than the exception, including the 57 million USD purchase of a Hong Kong apartment by a wealthy Chinese buyers.
With its currency pegged to the US Dollar the resulting low interest rates, coupled with the city's famously open economy have led to a surge in hot money entering the market, fuelling the incredible growth in prices.
Policies to combat the speculation have already been put in place, including a stamp duty of up to 15% on homes resold quickly, and a 50% minimum down payment on homes costing more than 12 million Hong Kong dollars.
Chun-ying's announcement follows the warning of Financial Secretary John Tsang, who told legislators that he is worried Hong Kong property prices may overheat again thanks to low interest rates.
"We will closely monitor the market situation and are extremely concerned about the residential housing market," Mr Tsang told the Legislative Council. "We will not hesitate to launch more measures to prevent the property market overheating again."
- Friday 30 March 2012