XN000022-1995-03-29 — Page 62

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I shall speak on the four dominant themes in this year's Budget debate: property prices, supply of land for housing development, supply of flats and housing needs of specific groups.

Residential property market

On residential property prices, some Members have suggested that the Government should relax the anti-speculation measures introduced in June last year, As the while others have called for the imposition of more punitive measures. Financial Secretary said in his Budget Speech, the anti- speculation measures introduced last year are achieving the desired result. Speculative activities in the property market have subsided significantly. This is reflected in the drastic reduction of 85% in the number of short-term re-sales in February this year as compared with the peak in April last year. The latest information also shows that, compared with peak prices in April last year, prices of flats have fallen by an average of 19% in February this year, which is five more percentage points than in January. The need to step up controls has therefore not been indicated. We have no intention of introducing further intervention measures to influence the market. On the other hand, we will take positive measures to provide more land for housing and to increase the supply of flats, and let the property market adjust itself according to market economics. We will monitor developments closely, and will take note of views which Members of this Council, individuals and organisations wish to express on this subject.

An allegation was made, Mr President, in the Budget Debate regarding hoarding of new flats by private developers. We have no evidence of such activities. A vacancy rate of 4.7% of total private housing stock in 1994 is no cause for concern, and is indeed consistent with the average vacancy rate of around 4% in the past 15 years. I would point out also that hoarding would not be in the interest of developers, whose business it is to build and sell flats. Vacant flats would attract payment of rates and other finance charges, and developers' own liquidity would also be affected. For these reasons, on the other hand, developers have been urging the Government to relax the nine-month restriction on the pre-sale of uncompleted flats so that they can be sold early.