XN000022-1997-04-30 — Page 49

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Answer:

Mr President,

Before June 1994, speculation was rife in the pre-sale market of residential flats because of the long period allowed for pre-sale, and because of the freedom to resell such flats before actual assignment of the property. The high percentage of flats allowed to property developers for private sale also fuelled speculation since many of these buyers were not genuine end-users. Speculators bought and resold shell companies, and ballots were traded before flat selection. There were also incidents of long queues outside sales offices, causing law and order problems. In addition, purchasers were often given insufficient sales information, and this led to panic buying on occasions.

Since the announcement of the two series of new measures to boost flat supply and to dampen speculation this year, the property market situation at present is more stable. The pre-sale period for uncompleted flats is much shorter, and resale before assignment is not allowed. The quantity for private sale of uncompleted flats is reduced, and is restricted to genuine end-users. Speculation through shell companies has been curbed. Ballot-trading has disappeared. Sales are conducted in an orderly manner. Confirmors have been hit hard. Home buyers have benefited from more transparent information on the sale of flats. Co-operation from estate agent associations and the Law Society are forthcoming.

As regards Part (b) of the question, the Government's policy is to allow the residential property market to operate freely as far as possible, and intervene only if it becomes necessary.

It is difficult to lay down specific criteria as to when the Government may introduce further measures as this presupposes a hypothetical situation. We will continue to monitor the property market closely.

End