The 2022-23 Budget for Hong Kong was announced by the Financial Secretary today. Here is our commentary:
1. On the Land Sale Programme
Alnwick Chan, Managing Director, Professional Services
Due to limited supply in the latest land sale programme and the ongoing COVID-19 pandemic, we expect land sale revenue to fall to HK$60-70 billion in the 2022-23 fiscal year.
We suggest that the Government speeds up land development, increases housing supply, and accelerates completion through a multi-pronged approach including fast-tracking the implementation of the pilot scheme for land premiums.
The Government could extend the “standard rates” pilot scheme for land premiums to new development areas, so that land resources can be allocated efficiently to meet long-term housing needs.
Finally, the Government should report work-in-progress to the public in a timely manner.
2. On Measures to Support the Retail Industry
Helen Mak, Senior Director and Head of Retail Services
We welcome the Government’s distribution of cash coupons. However, as we do not expect the retail market to recover in 2022 due to the worsening epidemic and resultant uncertainty in Hong Kong’s economic outlook.
The Government should provide timely relief to both landlords and tenants to help tide them over difficult times.
Moving forwards, we recommend that the Government includes the retail sector in handouts under its Anti-epidemic Fund, and introduces a further round of consumption vouchers to stimulate the economy and accelerate the recovery of retail and F&B markets after the worst of the 5th wave is over.
3. On Modification of Mortgage Policy
Martin Wong, Director and Head of Research & Consultancy, Greater China
We support the Government’s decision to modify its mortgage policy, and expect this to stimulate small-to-medium sized home transactions and help more first-time buyers get onto the property ladder.
However, this has to be paired with revisions to Special Stamp Duty (SSD). Although property prices have slightly adjusted recently, they remain at historical highs. I do not believe that the Government will abolish Buyer's Stamp Duty (BSD) and Ad Valorem Stamp Duty (AVD) for overseas buyers and non-first-time buyers at this point in time. Nonetheless, the Government should study and modify the SSD, such as shortening the period from 36 months to 18 months, which could increase supply and transaction volume in the secondary market.
Such measures are unlikely to lead to a sharp rise in property prices. On the contrary, they could help to bring more affordable units to market, and bring about more transactions which would increase stamp duty revenue.
4. On Urban Renewal
Cyrus Fong, Senior Director, Valuation & Advisory
We support the Government’s move to streamline statutory procedures as this measure will more quickly increase land supply, and we believe it will be welcomed by the market.
This will undoubtedly speed up urban renewal and transformation of old districts, which will improve the living standard of grassroots citizens.
5. On strategic infrastructure projects
Natalie Wong, Senior Director, Valuation & Advisory
The Government plans to increase investment in capital works in the coming four years.
A number of strategic infrastructure projects have started research or construction works already, including the West Kowloon Cultural District, the Kai Tak Development, the Northern Metropolis (Kwu Tung North, Fanling North, Hung Shui Kiu, etc), and the Lok Ma Chau Loop.
In addition to boosting housing supply, the Government has set clear development objectives for these projects, paving the way for cultural, business, and innovation development to strengthen Hong Kong’s long-term competitiveness. In the face of global economic uncertainty, we advocate that the Government conducts regular reviews of these projects, and makes adjustments from time to time, in order to support diversified and sustainable development.