ENG-1994 — Page 248

HOUSING

Rental increases averaged 40 per cent between 1989 and 1993, although the increases were more significant in the luxury flats sector. The shortage of residential property for lease coupled with strong demand resulted in a further seven per cent increase in luxury rents during the first quarter of 1994.

The Task Force on Land Supply and Property Prices, chaired by the Secretary for Planning, Environment and Lands, was set up in April 1994 to examine the problem. The task force recommended a three-pronged approach in June, dealing with both the short and long-term aspects of the situation.

It recommended the introduction of measures to reduce speculation, in this way freeing more housing units for genuine home buyers in the short term. It also recommended increasing the housing supply through the provision of more land, accelerating projects already in the pipeline and facilitating private redevelopment. Finally, it recommended a review of existing planning and development processes, and the improvement of manage- ment information systems to streamline procedures and increase the administration's knowledge of, and responsiveness to, changes in the market situation.

The task force took a cautious and incremental approach, aiming to moderate property prices without causing a crash. There was no direct intervention in the price mechanism.

The main thrust of the task force's recommendations was to increase the housing supply to meet the demand from a larger and more affluent population. The target is to produce a minimum of 45 000, and if necessary 60 000, additional flats before the year 2001. The minimum target of 45 000 flats will be made up of 20 000 public housing units, including Home Ownership Scheme and Private Sector Participation Scheme flats and rental housing; 10 000 sandwich class housing flats and 15 000 private domestic flats.

Of the 120 hectares of land identified by the task force for housing development, about 70 hectares will be allocated before 1997-98, subject to agreement by the Sino-British Land Commission, to meet the additional housing commitment. The remaining 50 hectares will be held in reserve. A land reserve equivalent to about one year's land disposal will also be established over time.

The task force's anti-speculation measures aim to remove market distortion, ensure fair competition and protect the interests of genuine home-buyers.

Its recommendations resulted in the tightening of controls over the pre-sale of uncompleted flats, which are the market leaders on property prices. The measures included a reduction in the quota for private sales of uncompleted flats from 50 per cent to 10 per cent; the prohibition of the resale of uncompleted flats before assignment; an increase in the size of initial deposits from five per cent to 10 per cent of purchase price and in the amount of forfeiture from three per cent to five per cent of purchase price; and extension of the consent scheme to cover substantive modifications and exchanges involving residential accommodation.

Following the task force recommendation that planning and development processes be improved and a project monitoring system be set up to enhance the administration's responsiveness to changes in the property market, a high level inter-departmental housing project action team, led by the new Secretary for Housing, was established to expedite the processing of housing development projects. A comprehensive review of the scale and composition of demand for both private and public housing and an assessment of redevelopment potential throughout the territory are under way.

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