Chief Governor Leung Chun-ying will announce the first “ Policy Address” after his assumption of duty on next Wednesday. The market focus still is the policy about real estate. There was investment bank predicted, Hong Kong government’s housing policy may concentrate to increase land supply. But it is not exclude that government1 will constrainedly recall the farm lands in developing area of Northeast New Territories and supply public rent concession. They also predicted that US’s QE will mostly be completed before the end of this year. So it will be possible that interest will raise in second half of the year. It may affect the Hong Kong property price. Hong Kong may even appear stagflation crisis if the property price keep rising.
It is estimated that US will increase the interest next year which may blow Hong Kong’s property price.
Michael Spencer, CFO of Asia Pacific of Deutsche Bank expressed, it is estimated that US’s QE will mostly completed by the end of this year, so there will be possible that interest will raise in second half of next year. It will affect HK’s property price then. But since low interest environment and increasing of per capita income are good for HK property price, so it is predicted that the property price will rise. According to a simple model calculation of the bank, the HK property price will increase 10%-20% this year. But the model only consider economy increasing, interest rate and inflation etc. factors.
The bank pointed out further, HK economy recovery is mainly rely on export requirement to Euro, America and mainland. But it is predicted that the speed pf HK economy recovery will slow before the middle of this year. They believed the United States financial cliff and other outside economy shocks will be the major risks of HK economy. If HK property price can return to stable because of government’s measures, the inflation will possible fall back. If not, the property price continue rising will make Hong Kong get into stagflation.
Barclays: Policy Address's first duty is increasing the supply
The report of another investment bank Barclays predicted, “ Policy Address” will focus on the policy perspective in future 5-10 years including policies of population, poverty, pollution and housing. The bank predicted, increasing land supply still is key point of housing policy. For example, take Lung Kwu Tan in Tuen Mun, The little river bay and Lantau north as reclamation site besides Victoria Harbour to increase longterm land supply; Reiterate the short term target that supplying 20,000 units of private houses each year; Increase public houses and help HK people buying houses. For longterm measure, it is estimated to increase land supply by different methods in future 5 years. It is estimated there will be chances for medium developers to earn land development. But it is predicted that there will not new suppressive measures to property market.
Therefor, the bank predicted, “Policy Address” may has policy beyond all expectations including mandatorily recalling the farm lands in developing area of Northeast New Territories. This may bring negative effects to Henderson who has large quantities of farm lands. They also predicted that HK government may launch relief measure such as public rent concession. This measure is advantage to Real Estate Investment Trusts who major in Estate Shopping Centre. As for commercial property, they predicted government will reiterate to build Kowloon East into the second core business area and promise to supply longterm land supply for office building.
Guan Zhuo-zhao predicted there is no strict measure and will research man-made land in medium term.
Guan Zhuo-zhao, an economist expressed after radio interview, the current HK property price is overtop and citizens’ house burden is higher than it in 1997. But it is rational bubbles. He believed citizens should buy houses in pudding time. He predicted, “ Policy Address” that Chief Governor Leung Chun-ying will announced will push the policy to control property market but will not have “ strict measure”. He was believed that government can increase supply by changing land use including development of country land, enlarging plot ratio and additional launching area limited land and so on. At the same time, medium and longterm measure is major on land building. It may be recovering the reclamation.
