Yam calls for special land agency to be set up using surplus

Local | Staff reporter 29 Aug 2018

Executive council member Joseph Yam Chi-kwong said the government may invest part of its financial surplus into a special purpose vehicle to help meet the insatiable demand for land, especially for residential purposes.

The former Hong Kong Monetary Authority chief executive said in a blog post yesterday that the vehicle should be granted the right to take responsibility for land development and supply to meet the government's target in its land-supply policy.

The government recorded a HK$7.16 billion surplus in February, according to the Financial Services and Treasury Bureau.

Fiscal reserves stood at HK$1.13 trillion at the end of February. The surplus should be used to serve Hongkongers instead of being invested in overseas assets, such as US Treasury bonds, said the former head of Hong Kong's de facto central bank.

Land premiums accounted for 20 percent of government revenue in the previous financial year. Yam said the government cannot have too large a surplus or it would hinder growth.

He said the government is the sole provider of land and should be responsible for coming up with a solution for soaring property prices and addressing rising home demand.

Housing needs should be catered to and it would be in the interest of the public if prices could return to affordable levels, he said.

There is, Yam said, a serious and urgent problem of shortage of land for use in building private homes, thereby causing a price spiral.

With prices of private flats at high levels, some demand has switched to subsidized housing, exerting pressures on government housing supply, he said.

Official data have shown that the index of home purchase affordability has worsened to about 74 percent in the second quarter. Overall, the average price of flats in June exceeded the peak level in 1997 by 125 percent.

Yam said reclamation is a long-term solution to boost land supply, while rezoning farmland and country parks will be a short- to medium-term option.

He expressed doubts whether the government's strategic reclamation plan under an envisioned East Lantau Metropolis will provide enough land to address land supply issues in the future.

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