Aggressive moves pushed to support property, HK status as financial center

The declines in land and home prices will weaken people's ability to spend and reinvest, which will drag down the economy, Centaline's chairman warns, while urging the government to drop cooling measures to help Hong Kong maintain its role as an international financial center.

It comes as a secondary market index has dropped for seven weeks in a row to a new low in seven years, just as the administration has suspended the sale of residential-use land this quarter for the first time in recent years to control the supply of new homes.

To avoid the impact of the sluggish property market, Shih Wing-ching urged the government to use more aggressive moves to cancel the "spicy measures" that have been introduced to cool the sector since 2010, if policymakers "expect home prices to stabilize again."

The founder of Hong Kong's leading real estate agency projected that home prices could stop diving following a decline of 5.1 percent.

Shih said the impact of the land sale suspension might fail to take effect immediately and that he thinks the administration did not prepare well against the low prices. During the financial year through March, the administration only sold three out of 12 pieces of land in its yearly plan, while recording six withdrawals of land auctions last year amid a weak market sentiment.

Shih also suggested introducing more capital to improve the market, including easing the limits on investor visa holders in real estate investments or allowing the use of Mandatory Provident Fund for down payment and mortgage loan repayment, like in the mainland and Singapore.

Moreover, Shih said he is worried that the economy would continue to come under pressure amid the rising Sino-US tensions and that Hong Kong's advantages, including free capital flow, could fade.

Without funds from the West, "it would be harder for Hong Kong to maintain its status as an international financial center," Shih said.

He reiterated his opinion published last month that Hong Kong becoming an "international financial center relic" could turn into a reality with US measures limiting China's development.

themis.qi@singtaonewscorp.com