Hong Kong’s Chief Executive Leung Chun-ying on Tuesday announced the withdrawal of a policy that restricts non-residents from purchasing some new property units in the city, taking the initiative amid signs that home prices may have hit a peak and are starting to moderate.
Leung said the “Hong Kong Property for Hong Kong People” policy has been well accepted by Hong Kong people but it will be relaunched only when the housing market gets overheated again.
Strictly speaking, Leung did not go back on his pledge made during his election campaign in 2012 as he had at that time used some tricky wording that the policy will only be in place when the market is overheated, observers said. Of course, different people will have different interpretations about what exactly would constitute an overheated market.
The Centa-City Index, compiled by the Centaline Property Agency Ltd., fell 4.1 percent to 118.42 in the week ended March 23 from a year ago. The 100 point level refers to the peak of property prices experienced by homebuyers in 1997.
It is pretty certain that Leung’s move will not be welcomed by Hong Kong locals who still find the city’s home prices too high and unaffordable.
Last year, the government launched two sites under the “Hong Kong Property for Hong Kong People” initiative, but they were bought by a Chinese property developer — China Overseas Land & Investment Ltd. (00688.HK) — during auctions.
Former Legco member Lau Ping-cheung, who helped Leung draft his election document in 2012, said it is a good move to withdraw the policy and announce it immediately. He said it is not wise to repeat the mistake of former Chief Executive Tung Chee-hwa, who withdrew a target to build 85,000 apartments annually but did not announce it until being asked by the press.
The reason why Leung wants to withdraw the policy is not because of pressure from property developers, observers say. It is more likely that he feels that keeping the policy will give a bad feeling to mainland people. Withdrawal of the policy will come as a friendly gesture toward Beijing.
Huaichi railway first to adopt market pricing
Freight rates on the Huaichi railway line will be decided by investors and users, making it the first in the country to adopt market pricing, China Securities Journal reported Wednesday, citing the National Development and Reform Commission (NDRC). The 180-kilometer railway, which connects Inner Mongolia and Shanxi province, is under construction and will be mainly used for transporting coal. It is a joint venture between coal producer Shenhua Group and local firms, the report said. The NDRC has changed its role in rail freight pricing from setting rates to suggesting price levels.
China to expand foreign investment schemes
China will continue to open up its capital market by expanding a mechanism for qualified foreign institutional investors, China Securities Journal reported Wednesday, citing unnamed sources. The government will increase quotas and widen the scope of the qualified foreign institutional investor (QFII) scheme and the renminbi qualified foreign institutional investor (RQFII) program. QFIIs hold less than 2 percent of China capital market compared with more than 20 percent in mature markets and other emerging markets. In March, the State Administration of Foreign Exchange approved quotas worth US$1.26 billion and 18.1 billion yuan (US$2.91 billion) for QFII and RQFII, bringing the total to US$53.58 billion and 200.5 billion yuan, respectively, as of the end of that month.
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