Hong Kong to Boost Home Sales, Favor Locals as Prices Surge | Armonk NY Homes

Hong Kong will boost the supply of homes and give preference to local buyers as it seeks to cool housing prices that have surged to the world’s most expensive, fueled by record-low interest rates and Chinese investment.

Chief Executive Leung Chun-ying announced a 10-point package yesterday that included speeding up the approval of permits for private project sales, selling public units that were originally intended for rent, and drafting policies that will give preference to local buyers.

The measures are the toughest since the government in June last year increased down-payment requirements, and the strongest move yet to quell concerns about a surge in non-local purchases, particularly by mainland investors that account for a third of new home buying in the city and helped drive prices up 85 percent since the beginning of 2009. The measures don’t go far enough, said Wong Leung-sing, associate research director at Centaline Property Agency Ltd.

“It’s a nice gesture, but it won’t have a real impact on prices,” said Wong. “Accelerating sales and increasing supply wouldn’t solve the problems. They haven’t addressed the real issue and that’s the market is flush with cash.”

The seven-member Hang Seng Property Index (HSP), which tracks developers, including Sun Hung Kai (16) Properties Ltd. and Cheung Kong (Holdings) Ltd., rose 1.1 percent at the close of trading in Hong Kong. The benchmark Hang Seng Index fell 0.4 percent.

Wealth Gap

Sun Hung Kai, the city’s biggest builder, rose 1.5 percent to HK$100.60, while Cheung Kong (1), controlled by Li Ka-shing, Hong Kong’s richest man, gained 1.6 percent to HK$105.50. Henderson Land Development Co., controlled by billionaire Lee Shau-kee, gained 2.1 percent to HK$47.70.

“These policies will help stabilize prices,” said Lee Wee Liat, a Hong Kong-based analyst at BNP Paribas. “They’re focusing on flushing out the supply to the market. Developers will try and speed up sales but will be moderate with pricing. The important thing is they’re not trying to stifle demand.”

Leung, a surveyor, took over as Hong Kong’s leader last month on a pledge to address a widening income gap and housing affordability.

Home prices have increased 12 percent this year, bringing the gain to 47 percent since October 2009, when Leung’s predecessor, Donald Tsang, first introduced measures to prevent the formation of an asset bubble. Prices recovered from the second half of last year even as the government lowered its growth forecast for 2012 and as China’s economy slows.

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