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CY Leung's Housing Plans Face Hurdles
Source: http://www.channelnewsasia.com/stories/eastasia/view/1249772/1/.html
Source Date: Thursday, January 24, 2013
Focus: Citizen Engagement, Internet Governance
Country: China
Created: Jan 23, 2013

HONG KONG: Hong Kong remains one of the world most expensive places to buy a home. It is being fuelled by hot money, ultra low interest rates, and an influx of mainland buyers.

To meet demand, Hong Kong Chief Executive Leung Chun-Ying has promised more land and more flats, but property analysts warn there are hurdles to achieving its targets.

More affordable housing was one of the platforms that Mr Leung had campaigned on to get elected.

Six months into power, and after much consultation, Mr Leung, a former chartered surveyor, has come up with a plan -- Build up a land reserve by reclamation, speed-up public and private housing development -- in effect, increasing housing supply by 18 per cent over the next five years.

Kenneth Kwan, chairman of the Royal Institution of Chartered Surveyors, said: "It's ambitious but ambitious is good, because you have to have a plan, an ambitious plan so that you have a vision of what the government is capable of doing.

"Whether you actually do it or not, depends on the market, because we're talking about five years."

But the Chief Executive's proposals are likely to run into stiff opposition -- with plans to create artificial islands west of Hong Kong island, lifting building restrictions in the mid-levels and Pok Fu Lam districts, and building a new satellite town in the New Territories.

Mr Kwan said: "We suggest that the government should have a centralised agency to do all this coordination among the different bureaus, different departments, like the previous Development Opportunities Office, to help in the coordination.

"Because he mentioned reclaiming, it is not just the government's problem, you need to have a lot of consultation with various interest groups. As CY says: 'it's hard choices, every solution has ups-and-down.'"

Property advisor Nicholas Brooke, who nominated CY Leung in the 2012 Chief Executive Elections, advises Mr Leung regularly.

Mr Brooke said: "Some of the key messages that I hoped for came over, that I played a part in crafting. The 'no-quick fix' is something to get across -- clear messages are important. Prior to the policy address, we were getting a lot of mixed messages."

Mr Brooke warns that Leung will have to prioritise in making bigger plots available, to handle a large number of units to be built.

Mr Brooke added: "If you look at the plan that he's mapped out, with every site that he plans to address, it faces challenges either with infrastructure planning or modifications, so the potential for slippage is quite high. Thus, supply could remain tight even longer than in the short or medium-term."

Home prices in Hong Kong are expected to remain stable, or rise by up to five percent this year, according to property analysts. Any correction in prices will come in once the supply-side of things catch-up with demand or when interest rates in the US starts to rise, since the Hong Kong dollar is pegged to the greenback. That means a correction is only likely to take shape later next year, or in 2015.

For those looking for an 800-square foot apartment in a middle-class neighbourhood on Hong Kong Island, you can expect to pay more than US$1 million.

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