Saturday, 23 June 2018

Ahead of Tax Announcement, Unsold Flats are Unloaded

Unsold flats that would have been hoarded longer went on the market today
The Hong Kong government is planning to introduce a vacancy tax on developers who hoard flats that are completed but not yet on the market. Usually the developer releases batches of flats in phases to see what the market sentiment is, and typically the prices of successive batches can be as much as 20 percent higher for basically the same flat.

Lam looking forward to tax announcement on unsold flats
Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor plans to announce this vacancy tax at the end of this month as a way to tame rising housing prices. Developers would be financially penalized for hoarding completed flats. But while they say they are unhappy with this impending announcement, they still made hoards of money today selling off leftover stock.

Of the 176 units for sale across the city, 119 were snapped up, including 107 parking spots and 24 motorcycle spots in Tseung Kwan O.

These were not sold at fire sale prices -- the developers just didn't make more money out of them like they would have before.

Even parking spaces were snapped up earlier today
Developers are probably already trying to figure out ways of completing flats in batches, and slowing down how fast they are built, though that could cut into their labour costs.

The other issue is land hoarding. Developers have large land banks and have been sitting on empty or undeveloped tracts of land waiting for the property value to go up. And then there's the homes for "indigenous" residents in the New Territories...

There is also talk of sacrificing the Fanling Golf Course to turn into housing. Surely there are other innovative ways to create more space for people to live in? We've said all along there are many brown sites that should be redeveloped. Why are they being left unused?

We appreciate Lam's initiative with the vacancy tax, but there needs to be a multi-pronged approach to tackle the issue in a more effective way.

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