2. The Chairman advised that in order to allow sufficient time for the LegCo Research and Library Services Division to prepare the research reports on "Supply of land" and "Supply of flats", discussion on Chapter 3 -- Increasing flat supply would be deferred to the meeting on 9 April 1997.

3. At the invitation of the Chairman, the Deputy Secretary for Housing (DS for H) briefly introduced the Chapter. He said that the Administration aimed at assisting and encouraging private sector investment in housing because the smaller the gap between the supply and demand for private housing, the lower the pressure would be on domestic property prices. To encourage investment in private housing, efforts would be made to ease supply constraints as far as possible, in particular on land and labour. Consideration would be given to inviting private developers to provide a suitable proportion of Private Sector Participation Scheme flats by way of "mixed developments", pending the results of a detailed feasibility study and a pilot scheme to be launched. The Administration would also continue to monitor the private housing market and to take action where appropriate to protect the interests of genuine home buyers. DS for H stressed that as the Consultative Document on Long Term Housing Strategy Review was a strategic document, short-term problems such as the recent concern over speculation in residential property, particularly in the upper end of the market, had not been addressed.

4. Before commencing discussion, Hon Albert CHAN Wai-yip asked to record his dissatisfaction at the Secretary for Housings recent remarks that there were no signs of speculation in the secondary housing market despite the surge in property prices. Mr CHAN pointed out that the prices of small and medium-sized flats had risen beyond the means of genuine home buyers. While acknowledging Mr CHANs concern, DS for H considered that speculative activities and property prices were two separate issues. The rise in the latter was largely attributed to the rapid growth in population on the one hand and the limited supply of land for housing on the other. DS for H conceded that home ownership in the private sector was still beyond the reach of many families despite the rise of 7% in affordability index over the past two years. To this end, the Administration had introduced a series of subsidized home ownership schemes such as the Home Ownership Scheme (HOS) and the Sandwich Class Housing Scheme to assist middle and lower income families in acquiring their own homes. DS for H added that the Administration was aware of the need to curb speculation and had implemented a number of anti-speculation measures in cooperation with the Real Estate Developers Association of Hong Kong since January 1997. These had proved effective in dampening speculative activities. The Administration would continue to closely monitor the property market and would introduce further measures if the situation warranted.

Encouraging private sector investment

5. While agreeing with the need to ease supply constraints, some members sought elaboration on the means by which the pledges outlined in paragraphs 4.4(a) to (c) in the chapter could be achieved. They pointed out that the Administrations response under paragraph A4 of the information paper circulated vide LegCo Paper No. CB(1) 1022/96-97(02) ran contrary to the real situation of an acute labour shortage in the construction industry. In response, DS for H considered that issues relating to land supply under paragraph 4.4(a) should be discussed in parallel with Chapter 3 on "Increasing flat supply". As for paragraph 4.4(b), DS for H advised that the Housing Branch had been working closely with relevant government departments such as the Planning Department and the Environmental Protection Department with a view to streamlining and speeding up the administrative procedures for the approval of private housing projects. The imposition of a statutory time frame for most of the procedures under the Town Planning White Bill was a step forward in this direction. The Chairman remarked that the subjects of approval process and control mechanism in real estate development would be further examined at a meeting of the Panel on Planning, Lands and Works. Regarding paragraphs 4.4(c), DS for H clarified that based on the latest estimates, no significant shortage of labour was expected in such categories as management staff and manual labour in the construction industry. However, there were some potential shortages in specific trades such as technicians. To facilitate a better understanding of the situation, the Secretary for Education and Manpower would commission a survey to ascertain the needs of the industry and, if necessary, would take early measures as appropriate to alleviate any specific constraints which might arise.

Joint ventures

6. Members were generally supportive of the concept of inviting private developers to build subsidized home ownership flats as part of mixed developments. Some members, however, remarked that their support was conditional upon such factors as a reasonable proportion and a random distribution of subsidized home ownership flats and private housing flats within the development, and determination of the prices of and management fees for subsidized home ownership flats in accordance with the prevailing standards for HOS. Others considered that the Administration should explore ways to encourage the private sector to use its land reserve for mixed developments. One possible way would be for the Administration to assist developers in converting rural land into serviced land for housing through such means as provision of infrastructure and increase in plot ratios. In return, the developers concerned would be required to make available a specified number of flats within the developments for sale to eligible purchasers at designated prices. This could increase flat supply in both the public and the private sectors in the short term.

7. DS for H advised that under the Administrations proposal, a proportion of, say, one-quarter of the total number of flats in mixed developments could be designated for subsidized home ownership flats. While the prices of private housing flats within a development would be determined by the developer concerned, the criteria for setting the prices of subsidized home ownership flats would be in line with those for HOS flats, i.e. inter-alia, purchasers affordability and the median rent-to-income ratio of 40%. DS for H assured members that the Administration would be prudent in choosing suitable sites for mixed developments to avoid a substantial difference in prices between subsidized home ownership flats and private housing flats within the development on the one hand and to ensure quality of flats on the other. The Chief Assistant Secretary for Housing (CAS for H) supplemented that the discrepancy in prices between these two categories of flats in a mixed development would be reflected in the land premium. DS for H thanked members suggestion of assisting developers in resolving difficulties in site assembly as this would help increase land supply to meet the production targets, in particular in the second planning period from 2001 to 2006, and undertook to relay the proposal for increasing the plot ratios in private sites for mixed developments for consideration by the Housing Project Action Team.

Admin

8. As to whether the new concept of joint ventures would bring about such improvements as reduction in the lead time for construction of flats and increase in flat supply as compared with the production target outlined in Chapter 3, DS for H clarified that the main objectives of the new approach were to provide a greater range of products for purchasers of subsidized home ownership flats, and to enable purchasers to enjoy higher standards of design, finish, facilities and management than those under the Private Sector Participation Scheme (PSPS). Some members were not convinced that private developers should be involved if no significant improvements in construction time and flat supply were anticipated. They remarked that there were a number of ways by which the quality of flats under the existing PSPS could be enhanced, for example by setting a higher sale price. Hon SIN Chung-kai was worried that the Administration would readily invoke the provisions in the Crown Land Resumption Ordinance (CLRO), Cap. 124 in order to acquire more land for mixed developments. Hon Albert CHAN Wai-yip considered it useful for the Administration to conduct a financial analysis, by reference to a particular project, on the profits to be generated for developers should the new concept be applied.

9. Hon Frederick FUNG Kin-kee did not agree with Mr SIN as CLRO only dealt with resumption of land for redevelopment purpose which was irrelevant to Chapter 4. Mr FUNG shared his experience as a member of the Hong Kong Housing Authority (HA) in drawing up the proposal on joint ventures. He said that such a concept was intended to gradually shift the task of constructing HOS to the private sector so that HA could concentrate on building public rental housing flats. The new approach would also bring extra benefits including speeding up construction of HOS flats, better quality of flats at lower prices, and privatization of estate management in subsidized home ownership blocks. Mr FUNG, however, questioned the rationale for not designating HA to carry out the pilot scheme on joint ventures. DS for H advised that the Administration had no objection to including HA in a pilot scheme. The Hong Kong Housing Society had been proposed on account of its experience in piloting new housing schemes targeted at certain groups. In reply to a members concern on possible monopoly in the event that all HOS flats were built by private developers, DS for H assured members that the Administration would stipulate clearly the terms and conditions in the relevant development contracts.

10. A member asked if the Administration would consider encouraging owners of old private buildings to repair and renovate their buildings in lieu of redeveloping them. CAS for H appreciated the members suggestion as this would bring about improvements in living conditions, in particular for those legal new immigrants and residents living in bedspace apartments. DS for H advised that such a proposal had been considered in the context of the policy document on Urban Renewal and undertook to provide an updated position on the subject in due course.

Admin

Monitoring the residential property market

11. Having regard to the swift release of updated information on property transactions by an estate agency company, the Chairman considered it necessary for the Administration to review its information system so that appropriate actions could be taken promptly in response to the changing market situation. DS for H emphasized the need to ensure the accuracy of property information collated before contemplating any form of intervention. Information such as property prices could only be confirmed upon receipt of the Agreements for Sale and Purchase and Deeds of Assignments by the relevant departments; this also explained the discrepancy in time taken for compiling relevant information. DS for H assured members that the situation would be significantly improved after implementation of the Integrated Housing Information System which would bring together comprehensive information on land supply, housing production and the property market.

III Any other business

12. The Chairman reminded members that the next meeting would be held on Monday, 24 March 1997, at 8:30 am to study Chapter 5 on "Encouraging wider home ownership".

(Post-meeting note: The meeting had been cancelled due to the absence of a quorum.)

13. The meeting closed at 6:15 pm.

Legislative Council Secretariat
17 April 1997

Last Updated on 20 August 1998