Policy support, Covid-19 vaccines create new opportunities in Hong Kong property market

Removal of double stamp duty for commercial properties will bring investors back into the market
Lantau can be part of housing solution, rival Island South as an alternative in terms of affordability

Victoria Allan

Published: 12:00pm, 8 Dec 2020

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Chief Executive Carrie Lam Cheng Yuet-ngor’s fourth policy address was undoubtedly one of the most complicated of her tenure; has anything made governance, anywhere in the world, more difficult this year than Covid-19?

Given rising unemployment in sectors hit hard by the pandemic, it should come as no surprise that housing supply and property prices were high on her agenda. Housing, she said, is not only a matter of supply and demand, but also an issue of social justice and allocation of resources. F rom the point of view of governance, “unresolved housing problems may jeopardise the long-term prosperity and stability of … society”, Lam said.

And therein lies the city’s biggest challenge, and one that Lam seemed willing to tackle head on in this year’s policy address.

Whether it’s policy that is working or virus-related dampening, or a combination of both, prices have risen just 0.4 per cent this year, according to the Rating and Valuation Department.

Lam attends the question and answer session at the Legco chamber in Tamar, a day after the 2020 policy address. Photo: Felix Wong

The removal of double stamp duty for commercial buyers was the right thing to do, for business and for general sentiment. It will not push commercial prices up, but it will bring investors back into the market. Best of all, it will free up operating capital for small and medium-sized businesses. That is good for residential market sentiment.

The policy address recognised the need to reform approval processes for government and private development to make them faster. There is also the need for more transitional housing, the release of more land in the New Territories, and to start exploiting the advantages of the Greater Bay Area for jobs as well as housing – as the bay area is poised to become a regional Silicon Valley.

All are policies that will be good for Hong Kong in the long run. While fresh housing supply is still a few years away, and chances of a drastic fall in prices are low, it’s a step in the right direction. In a city like Hong Kong, the inability for residents to buy a home is unacceptable. Long waiting lists are just not sustainable.

Also good for the long run is a renewed focus on Aberdeen and Wong Chuk Hang as cultural, business and residential districts. The more the wealth gets spread around, the more dynamic the city becomes. Island South could be the next great destination and there’s plenty of room for everyone, including private developers.

By the same token, the commitment to Lantau really is part of any housing solution. The more public housing, the better. As home to the Hong Kong-Zhuhai-Macau Bridge, a link to Tuen Mun, the airport and a border crossing, Lantau is at the centre of Hong Kong’s future. It is the road to the Bay Area. As long as the right agencies take care to protect the environment around the island, Lantau will start to rival Island South as the place to get away from the city without getting away from its conveniences. It promises a welcoming alternative in terms of affordability.

Heading into the winter, there are economic and health hurdles still to leap. The pandemic isn’t going to ease off, but as Hong Kong remains vigilant, the city should make it through the season relatively well. November’s back-to-back announcements regarding effective vaccines by Pfizer, Moderna and AstraZeneca being fast-tracked for approvals is the light at the end of the tunnel.

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We’re still a long way from getting past the pandemic but it’s a start, and combined with supportive policy it’s the kind of news that buoys sentiment and makes us hopeful for the future.

It has been easier to transact properties in 2020, and for the first time in a long time there is value in the market. Vendors are being realistic. Though uncertainty remains, the luxury sector over HK$21 million (US$2.71 million) is still remarkably free of distress. O pportunities to invest will continue into 2021.

Total mass-market transactions in the secondary market this year have surpassed 2019’s, suggesting the appetite for property has not diminished. For anyone with a mid to long-term view on Hong Kong, now is a good time to dive into the property market.

Victoria Allan is the founder and managing director of Habitat Property

This article appeared in the South China Morning Post print edition as: Policy address positive for housing prices and supply

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