Financial Secretary Paul Chan Mo-po expects the tight supply in the property market to ease but warns homebuyers of the risk posed by possible interest rate hikes this year.
In his budget speech delivered on Wednesday, however, Chan made no mention of any changes to existing measures aimed at cooling the housing market, such as the special stamp duties that some parties want to be suspended.
He said public housing production over the next five years is estimated to reach 100,000, of which about 75,000 are public rental housing units and 25,000 are subsidized sale flats.
The financial chief said the supply of private residential flats will increase, forecasting about 20,800 units on average will be completed in next five years, up 50 percent from the past five years.
As for land supply, Chan said there will be 27 residential sites, including 15 plots rolled over from 2017-18, to be auctioned off in the coming financial year, providing space for about 15,200 flats.
Together with railway property development projects, the Urban Renewal Authority’s projects and private development/redevelopment projects, Chan said the potential land supply for the whole year is expected to create a capacity for about 25,500 units.
In the first half of this year, the Task Force on Land Supply will launch public consultations on various options to increase land supply. Recommendations will be submitted to the government by the end of this year.
Meanwhile, as a way to relieve people’s burdens, the government is waiving property rates for four quarters in 2018/19, subject to a ceiling of HK$2,500 per quarter for each rateable property. The measure is estimated to benefit 3.25 million properties and reduce government revenue by HK$17.8 billion.
As an alert to homebuyers in the city, Chan said that he believes the key factors underpinning soaring property prices over the past few years are “gradually undergoing fundamental changes.”
He said the ultra-low interest rate environment of the past few years will no longer persist, together with the increase in housing supply in the pipeline, will put pressure in the property market. He warned prospective homebuyers to carefully assess the risks, especially the impact of interest rate hikes on their ability to repay.
In his speech, Chan unveiled tax breaks and other measures to benefit the community. He said the government will:
- Reduce salaries tax and tax under personal assessment by 75 percent subject to a ceiling of HK$30,000;
- Widen the tax bands for salaries tax from HK$45,000 to HK$50,000, increase the number of tax bands and adjust the marginal tax rates;
- Increase the basic and additional child allowances, and the allowances for maintaining a dependent parent or grandparent;
- Reduce profits tax by 75 percent, subject to a ceiling of HK$30,000;
- Provide a one-off grant of HK$2,000 to each student in need;
- Pay the fees for candidates sitting for the 2019 Hong Kong Diploma of Secondary Education (HKDSE) Examination; and
- Ask Ocean Park to hand out 10,000 complimentary admission tickets to primary and secondary school students in the coming year.
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