Hong Kong Scraps Developers-Led Land Auctions as Supply Dwindles
Hong Kong’s government will scrap a near decade-old system of selling land after receiving minimum bids from developers, as it seeks to increase the supply of homes to curb price gains.
“We won’t have to wait for any developer to trigger a land sale,” Secretary for Development Paul Chan told reporters today. “They will be determined by the government based on the needs of the market, to ensure land supply can be increased to the fullest extent.” The system will be scrapped from April, he said.
Hong Kong home prices have doubled since early 2009 on near-record low mortgage rates and a lack of new supply, benefiting developers including Sun Hung Kai Properties Ltd. (16) and Cheung Kong Holdings Ltd. (1) Hong Kong Chief Executive Leung Chun- ying has imposed property taxes on foreigners to curb demand and has pledged to bolster land supply as discontent soared with the rising unaffordability of homes.
The Hong Kong government introduced the so-called application list system in 2004 after real estate prices plunged during the Asian financial crisis and the severe acute respiratory syndrome health crisis. Under the system, land auctions are triggered only when developers promised to pay minimum amounts for sites on a list.
Hong Kong halted regular land sales in 2002 and partially resumed them in 2010.
For the past two fiscal years, developers only triggered three land sale with the bids, Chan said. The government plans to put 46 residential sites up for sale for the fiscal year starting April, he said.
Since 2010 the government has introduced at least six rounds of property curbing measures, including raising transaction taxes and raising mortgage down-payment requirements.
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