Hong Kong's perennial housing problems may finally be tamed as the government pursues its first long-term strategic plan since 1998, the time of the Asian Financial Crisis, CY Leung, chief executive of the region said.
"We need to break the backbone of the housing problem," Leung said at the Credit Suisse Asian Investors Conference in Hong Kong.
The cost of housing in the special administrative region of China has been a source of deep discontent even before Britain handed over the city to the mainland in 1997. But Hong Kong's property prices have more than doubled since 2009, consistently ranking among the world's most expensive property markets.
In August of last year, Chinese University of Hong Kong's housing affordability index hit an all-time low. In 2002, a household would need 5 years of savings to buy a modest 40 square meter flat, the survey showed; today they would need 14 years' savings.
"We are working on the supply side," Leung said, noting plans to add 480,000units over the next 10 years. The city is planning to target developments in outlying areas, such as Kowloon East and East Lantau, as well as land reclamation projects between Hong Kong and Lantau islands.
In addition, the government will continue to target demand, Leung said.
"We are trying to manage down and in some cases manage out altogether three types of demand, which in our view should take a lower preference compared to occupational demand," he said, citing speculative demand, investment demand and external demand.
The government, sensing creeping public outrage, resorted to draconian measures a couple years ago, including doubling the stamp duty (property transaction tax) on many buyers, mainly non-permanent residents, in order to cool the market, and raised the down payment requirements, in some cases to 60 percent of the sales price.
"We do not rule out the possibility of having to carry out additional demand action measures if prices continue to run away," Leung said.
-- Bernie Lo contributed to this article.