Written by 
Cici Cao
The government must have control over land arrangements to ensure supply, Chief Executive John Lee Ka-chiu says in response to an “overcorrection” warning issued by former leader Leung Chun-ying, as home prices hit an eight-year low last month.
Lee said the lack of land creation at the start of the century failed to ensure supply and led to problems such as runaway property prices, making it difficult for people to own homes. He added that the issue cannot be resolved in a short time as land creation takes years.
Land creation “often takes a long time and we have to create it continuously,” he said. “When necessary, we can release land for property development or we can keep it in our land reserve.”
Lee stressed that control over land arrangements is necessary to protect people’s interests.
Financial Secretary Paul Chan Mo-po had also dismissed Leung’s warning, saying authorities cannot suspend land development because of market volatility – a lesson learned from previous administrations.
Leung earlier warned of the risks of oversupply in the property market in a social media post after the government announced plans to offer more housing units in new development zones in northeastern New Territories.
He raised concerns that the oversupply of land and housing would lead to property prices plummeting, causing more cases of negative equity.
The Rating and Valuation Department, meanwhile, said the private domestic residential prices index fell to 287.9 in September, down 1.67 percent month-on-month and 12.52 percent year-on-year.
The index has fallen for the fifth month in a row, hitting an eight-year low. It has fallen 7.5 percent so far this year.
The rental index rose for the seventh consecutive month and reached 196, a five-year high.
But the month-on-month rate of increase slowed to less than 0.1 percent, indicating that more people have turned back to buying instead of renting after the rate cuts cycle started.
Louis Chan Wing-kit, Asia Pacific vice chairman of Centaline’s residential division, said the continued drop was because of the slower effect of interest rate cuts and the impact of Beijing’s stimuli package not reflecting in September.
Chan expects property prices to stop falling and then to rise by 3 to 5 percent in the fourth quarter, boosted by mortgage easing measures in the policy address.
The Hongkong and Shanghai Banking Corporation also expects 5 percent growth for residential property prices next year, reversing a downward trend from 2022, driven by more local buyers and investors.
cici.cao@singtaonewscorp.com