Property bubble in progress.

Once upon a time, owning a home is a basic human right.
Before Hong Kong government use the high land value to reduce the tax rate.

Hong Kong Government developed the so-called high land value policy: using expensive land price to support the low tax policy via the selling of land.

With the foreign funds flooding from PRC and other countries, some flat's price raised to 70,000 per sqare fleet, where a normal workforce can afford this flat only after working about 1,200 years. (the flat sold in the price of HK$430,000,000, with the normal average salary income is HK$30,000 per month)

The problem is, eventhough up to this moment there are other flats about HK$4000 per square feet, they will gone soon. The land supply is always the key issue to reduce the price. The flat prices raise is as fast as 1997, the government still keep on the supply of cheap flats as zero. This sound just so familiar with locals for a bigger property bubble that will blast both HK people and PRC investors into disaster. However the Tsang government seems keep on his old tricks and use only words to "monitor" the market "closely".

I just wonder how catastrophic would that be.




(From SCMP web site)
Airwaves hot with talk of costly flats, as Tang gives budget advice
Dennis Eng and Fanny W.Y. Fung
Oct 17, 2009


For many people, owning a home is their ultimate aspiration and major investment.

Yet Chief Secretary Henry Tang Ying-yen said yesterday households shouldn't spend more than a third of their income on loan repayments. If the public followed his advice, there would be a lot fewer homeowners. (Tang took a more conservative line than banks, which allow homebuyers to use up to half their monthly income to repay mortgages).

In fact, seven out of 10 households might not be able to buy a typical flat - costing HK$2.8 million and measuring 700 square feet - of the type Chief Executive Donald Tsang Yam-kuen this week said was both affordable and plentiful.

Assuming a 30 per cent down payment and an interest rate of 2 per cent, the monthly instalments on a 20-year mortgage for such a flat would be HK$9,915. In the second quarter of this year, more than 1.65 million households, or 70 per cent, made less than HK$30,000 a month, government statistics show. Using the above assumptions, if Tang's suggestion were followed, just 648,700 of the 2.3 million households could afford repayments on such a flat.

Tang's comment yesterday came as the airwaves were hot with talk of Hong Kong's unaffordable flats for a third day.

The property market this week has seen luxury homes fetch red-hot prices. Henderson Land Development (SEHK: 0012) sold a duplex at its luxury project at 39 Conduit Road for HK$439 million, or a world record HK$71,280 per square foot. Sun Hung Kai Properties (SEHK: 0016) yesterday secured reservations for a batch of 30 flats at its Kowloon Peak development, Aria. With prices starting at HK$9,001 per square foot, the flats cost from HK$6.6 million to HK$14.2 million.

All this has stoked fears of a property bubble and a lack of affordable housing.

"I think it's excessive, if I may say so. Totally," Chief Executive Donald Tsang Yam-kuen told ATV World's Newsline programme yesterday.

"To me it is obscene in a way, the sudden rise in the price of one or two penthouses in a new development. But what is important from a chief executive's point of view, in fact the administration's point of view, is whether it will impact on the pricing of the mass market.

"The prices at the moment for most residences are quite reasonable. But we have to be very, very careful. I must remind myself that the 1.2 million homeowners in Hong Kong will be very unhappy and very angry if they feel that, because of a government policy, the value of their property falls."

This sentiment was reflected in Tsang's lack of enthusiasm, at a lunch with legislators, for resuming regular land sales.

Democrat lawmaker Lee Wing-tat said he would table a motion in the Legislative Council calling on the government to make sites available for auction on a regular basis. Lee said he would discuss the exact wording of the motion with legislator Chan Kam-lam, of the pro-government Democratic Alliance for the Betterment and Progress of Hong Kong.

Under the existing system, developers are invited to bid for sites the government lists as available. An auction is triggered if a bid is close enough to the government's minimum price. Only two small plots have been sold this way in the past two years.

Professor Eddie Hui Chi-man, of Polytechnic University's department of building and real estate, said the annual supply of new flats was insufficient to meet demand.

With a limited supply of new flats, few potential homebuyers appear keen to enter the market despite the global downturn.

A City University survey gauging consumer confidence found improving sentiment for the overall economy, living standards and the job and stock markets, but not housing.

The Hong Kong Consumer Confidence Index's third-quarter reading for housing purchases dropped 12.7 points to 75.5 from 88.2 in the second quarter, the lowest since the index started a year ago.

The index measures consumer confidence on a scale of 0 to 200. Scores below 100 suggest a lack of confidence while scores above 100 reflect confidence. The survey covered more than 1,000 respondents.

related web sites: ( in Chinese )
http://www.businesstimes.com.hk/a-20091017-39113/45232233


Other details:
YAHOO News:

瑞銀：高地價製泡沫勁過九七
(星島)2009年10月17日 星期六 05:30

(綜合報道)

(星島日報 報道)住宅樓價過去大半年反覆上升，年初至今累計升幅已逐漸逼近三成，擔心樓市釀成泡沫的聲音愈來愈多，一直看好樓市的瑞銀便認為，政府現時在土地上的低供應及高地價政策，正幫助樓市形成泡沫，這個由政策引起的樓市泡沫，甚至較九七年的一次更大。特首曾蔭權 昨日強調，須審慎處理有關政策，否則可能令全港一百二十萬業主感到「不快和憤怒」。

　　特首審慎免百萬業主憤怒

　　曾蔭權首次在《施政報告》中提及樓市問題，令有關討論升溫。他昨日接受電視台訪問時表示，樓價走勢影響層面廣，政府會很小心監察樓市：「我覺得現時住宅市場價格合理，所以我密切地關注及監察情況，當然我們有政策去應付，但要非常小心，我必須提醒自己，香港有一百二十萬業主會感到不快及憤怒，因為政府政策令樓價下跌。」

　　瑞銀亞洲房地產研究部主管王震宇在報告中指出，特首曾蔭權日前在《施政報告》中的說話，令人肯定政府會繼續實行土地低供應及高地價政策，在香港住宅新供應處多年低位的環境下，當經濟復甦，租金與營商成本升上新高的風險將增加，加上環球資金泡沫未找到紓緩的出路，樓價重現泡沫的風險勢增加。他指出，在現時的土地政策下，政府通過市建局 與港鐵供應的住宅，已佔私人市場超過一半，再加上房委會每年興建額外的五萬七千六百個單位，政府直接及間接已控制了市場供應的八成，令人擔心將令樓市分裂為供「非常富裕」及「非常貧窮」的兩個階段，使得中產私人住宅市場沒有空間發展。他認為，政府應將公共房屋的供應轉向私人市場，此舉既可增加政府收入，又可減少日後對公營房屋的資助。對《施政報告》提出的活化中環 街市計畫，他表示感到失望，但相信或對中區大業主有利。

　　野村：扣緊安全帶搭順風車

　　早前已認為樓市正形成泡沫的野村證券，昨天也發出報告，指恒地的西半山豪宅「天匯」，創下呎價七萬一千二百八十元的紀錄，這類消息最終或會引發一般住宅也漸現泡沫，但野村依然相信，目前樓市泡沫僅在形成初期，暫時大可扣緊安全帶，先享受一輪樓市的順風車。

　　藍籌地產股昨日則個別發展，以剛推出峻弦的新地表現最佳，升超過百分之一，報一百一十九點一元。