Chief Executive Donald Tsang (right) attends a joint radio phone-in program yesterday to answer questions from the public on the 2009-10 policy address. The program is jointly hosted by Radio Television Hong Kong, Commercial Radio and Metro Radio. GIS

HONG KONG: Chief Executive Donald Tsang has repeated his promises that the government will fine-tune land supply arrangements to hurry the pace of bringing residential sites to the market. The demands for affordable housing in the local market already are pressing.

"The sharp rise of the prices of luxury flats has no significant influence on the general public, according to the past experiences. The SAR government will monitor the market conditions closely, and observe if it is 'infectious' and affects the whole property market," Tsang said yesterday when answering questions on a radio phone-in show.

He indicated the government will not use the "visible hand" to manipulate the property market. He believed the government has enough experience gained from the bursting real estate bubbles of 1997 and 1998 and is well aware of "where the dangerous line lies".

The price of 700 to 800-square foot flats for the general market remains stable, Tsang said.

Buying a flat costs about 7.6 years of a person's income today, calculated by average house prices and incomes. Back in 1997 it cost 12 years of income, according to government information.

Tsang encouraged people not to pay much attention to the prices of luxury flats at HK$60,000-70,000 per square foot. There were still plenty of flats at HK$4,000 per square foot in the market, he added. He also shared his personal story that he also rented houses after his marriage, and bought his own apartment when he was in his 30s.

Mr Law, a computer engineer who is married and has a baby daughter, said he and his wife have tried to buy a flat for years to no avail.

The HK$4,000 per square foot apartments mentioned by the Chief Executive are mostly in distant areas, requiring more than an hour of commuting time. "That would be very difficult for us because my wife also works and needs to take care of our baby daughter. Our working hours are long enough as it is," he said.

Even if he had the time to commute, Law said that accumulating the HK$1 million down payment for a moderately-priced HK$3 million flat seems like an impossible dream.

"The increase in property prices is much faster than that of the income of young middle-class people. I feel that the house prices and their financial affordability have been detached," said Francis Wong, professor of the Department of Building and Real Estate of the Polytechnic University, whose research area is affordable housing.

He analyzed the reasons and said the price of upmarket homes has soared by over 50 percent compared with a year ago. "That affected the market environment. The property owners will feel the heating market and raise their bids," he said.

Wong agreed the government should provide more land to help ease the housing problem for young people.

He suggested young people buy a smaller house first considering their affordability. It will be easier to change to a larger one after years. Renting or seeking financial help from parents and relatives are also practical choices.

(HK Edition 10/16/2009 page1)