We've been down this road before

All eyes are on a premium development site on The Peak that goes under the hammer today, with many wondering if it will reach the top end of estimates - a whopping HK$11.5 billion.

This Mount Nicholson Road site is viewed as a barometer for future luxury flats in the property market and, in particular, the two prime sites at Ho Man Tin and Kowloon Tong scheduled for auction on August 17.

Property giants like Cheung Kong Holdings and Sun Hung Kai Properties, have already expressed interest in the 251,000-square-foot Peak site.

All these positive signs, along with the rising share prices of local developers over the past two weeks, suggest today's bidding will be fast and furious.

No one will argue this will be an encouraging sign for Hong Kong as a global financial center. However, let's not forget the painful lessons we endured when the property market crashes.

It's true we now have a much healthier and stronger banking system in place to avoid a repeat of the crazy 1997 speculation that led to the property bubble bursting.

But what Hongkongers have to contend with now are rich mainlanders who can afford to pay in hard cash the 40 to 50 percent down payment - if not the entire sum - for real estate.

What's comforting is that over the past couple of months, the SAR government has introduced a series of measures to control property developers.

The Consumer Council should also be saluted for recommending the government set up a down payment database on property sales, after it found buyers are being given incorrect and inadequate information.

The council said the database should contain information - provided by government departments and developers - including detailed transaction records of new residential projects, such as the selling price, date and flat size.

One major recommendation the council made is to ban the release of non-official "intentional prices," or the potential prices of flats to be offered for sale before an official launch.

These "intentional prices" have made Hong Kong a laughing stock, especially when they make headlines in some Chinese-language newspapers whenever developers release them.

The council's proposed measures will certainly boost the transparency of apartment sales. Hopefully, they can avoid a repeat of the controversy at Henderson Land's 39 Conduit Road project, where many purported "record- breaking" deals fell through.

New rules and measures should certainly help home buyers. But the government needs to supply enough land for the mass market, as people are rightfully concerned about soaring property prices.

A recent international survey shows a typical 750-square-foot apartment in Hong Kong now costs US$608,000 (HK$4.74 million), while in Zurich, a similar unit would fetch only US$525,000. In Tokyo, such a flat would cost US$490,000, and in Singapore, US$448,000.

The survey pointed out it may take an ordinary worker in Hong Kong 20 years before he or she can afford to buy a home.

So home buyers should first consider affordability when thinking about buying a flat. They should also stop thinking that property prices will always go up as the recent boom is only because of the low interest rate and the influx of mainland capital.

英文虎報
Central Station | By Mary Ma