【明報專訊】THE auction of a site in Tung Chung, which the auctioneer has described as "unusual", shows that Hong Kong's property market is complicated, that many factors may cause changes in it and, one may say, that the government's measures to regulate it have begun to produce results. However, if the government's policy remains as it is, new flats will still be in short supply in the next three to five years. The government must not think it has succeeded at one go just because of the auction. It should take the long view. It should try in earnest to rationalise the supply and demand of flats and building sites and ensure that sales of uncompleted flats are fair and reasonable so that the property market will develop healthily.
The site went for $3.42 billion. It is only 19% higher than the offer that had triggered the auction. Under the application list system, a bid amounting to 80% of the open market value of a site will trigger its auction. Therefore, the transaction price is virtually the reserve price, the least market participants had expected it to fetch. It is much lower than what they had expected it would fetch (between $4.2 billion and $5.6 billion). On the seaside Tung Chung site over 2,000 flats can be produced. Though property prices have gone up a bit less steeply, flats will still be in short supply, and property prices will remain high. It is surely unusual that no major developers have been interested in it.
To officials responsible for carrying out the government's land policy, the "unusual" auction of the Tung Chung site is like a glass of icy water one sips when it is freezing. They have keenly felt every bit of it. It shows it is wise of the government to decide to tackle the situation as it has planned. Simply by dealing with supply and leaving it to market forces to determine prices, it can cause changes in the distorted property market.
It has been suggested that the "unusual" land auction resulted from the government's "nine measures and twelve moves". If it did, there are deep-rooted problems with the property market. They must be solved before it can return to normal. The "nine measures and twelve moves" are only designed to ensure fair transactions by making sales of uncompleted flats more transparent. Developers are required only to respect homebuyers' basic rights - for example, to allow them to take measurements of show flats. Some may say show flats will be overcrowded if homebuyers may do so. However, to solve the problem, developers only need to display accurate measurements in their show flats so that homebuyers will get the figures they need at one glance. The government still relies on developers to police themselves. It should closely monitor the situation. If those measures do not ensure fair transactions, it should try to protect homebuyers' rights by legislation.
The auction of the Tung Chung site has had another effect. As land premia have not gone up sharply, there is hope of reversing the expectation that property prices will always go up and never come down. People may be less anxious to vie with one another to "go aboard", and the government may have more time and greater latitude to straighten the property market out. Apart from increasing land supply and ensuring fair property sales, the government should consider regularly making mid- and long-term housing strategies as it did. It should scientifically ascertain flat demand, make plans to meet it and hold regular land auctions. Only if supply is always largely in equilibrium with demand will the property market develop healthily and normally. Only that is in Hong Kong's best interests.