Share
HONG KONG: Hong Kong developer stocks jumped the most in more than two years on speculation the government may ease curbs on home prices after the city’s leader said the market is no longer overheated.
Sun Hung Kai Properties Ltd, the city’s second largest developer, surged as much as 4.1% and Wharf Holdings Ltd advanced as much as 5.6%.
Chief Executive Leung Chun-ying said on Tuesday that the government won’t extend a pilot programme to reserve homes for local residents, part of a package of measures aimed at cooling prices in the world’s most expensive housing market. Prices fell 4.1% in the past year, after more than doubling since 2009, as higher sales taxes and down-payment requirements were imposed.
“Although we do not view the chief executive’s comment as a signal of actual easing, we believe the market will take a different view in light of the current cheap valuation of the Hong Kong property stocks,” Barclays plc analysts led by Paul Louie said in a note yesterday. “It is fair to say that the housing market is no longer overheating.”
The value of homes sales in Hong Kong fell to HK$20.6 billion (RM8.7 billion) in March from HK$27 billion a year earlier, Hong Kong Land Registry said on its website yesterday.
Leung in September 2012 announced a plan giving only citizens the right to buy apartments at some sites built by private developers to ensure local needs are met. China Overseas Land & Investment Ltd won tenders for two sites under the policy in June last year.
Suspending the policy would ensure that the housing supply target set by the government will be met, as adding the condition into land sales would cut demand from developers, the Barclays analysts said.
“When we launched this pilot scheme, we said we would only use it in an overheated market,” Leung told reporters on Tuesday. “If we need it in the future, we can launch it in a short period of time.”
Sylvia Wong, a Hong Kong-based analyst at UOB Kay Hian Ltd, said setting aside the plan won’t have any impact on the market, though she expects the curbs to stay in place as they were needed to keep the housing market in the current state.
“No one expects the curbing measures to get tougher,” she said yesterday by phone. “The question is when they will ease.”
This article first appeared in The Edge Financial Daily, on April 3, 2014.
