(HONG KONG) Hong Kong said yesterday that its efforts to cool the property market in the crowded former British colony showed signs of working after its latest land sale met a lacklustre response.
A site for non-industrial use near the city's international airport went under the hammer for HK$3.42 billion (S$607 million) on Tuesday, far below a HK$4.63 billion average forecast of analysts polled by Dow Jones Newswires.
The 282,017-square foot plot was sold to unlisted developer Nan Fung Group, one of only two bidders, after the auctioneer threatened to cancel the sale if the government's reserve price was not met.
In recent months, government officials have taken a high-profile stance in reining in soaring residential property prices after they jumped nearly 30 per cent last year.
Financial Secretary John Tsang said that the lukewarm result was a sign that the market was starting to stabilise, after luxury flat prices recently climbed to the boom levels of 1997, driven by deep-pocketed mainland buyers.
'The result of the auction has reflected the market situation. We have always hoped the property market will develop in a stable manner,' he told reporters.
He pledged to continue to increase land supply in the coming months, repeating a promise that he made in his February budget speech aimed at preventing a bubble.
'We will have land sales in June and July. The sales will keep coming.'
Analysts said that developers stayed on the sidelines at Tuesday's auction due to uncertainty about the full impact of the government's cooling measures.
'The impact can be especially strong on the small and medium residential flats, in light of the calls for the government to resume the construction of' subsidised housing, Charles Chan, managing director and valuation specialist at Savills in Hong Kong, told AFP.
Macquarie said that the poor response would weaken sentiment in the residential market in the near term, but predicted more active bidding at future sales because of a general land shortage and the greater attractiveness of the sites in question.
'Developers will likely remain active to replenish land but they might be more picky in light of more choices available,' it said in a report.
Apart from increasing land supply, the government has also raised the stamp duty for luxury flats to try to curb speculation and pledged to avoid excessive mortgage lending. -- AFP
Source: Business Times, 13 May 2010
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