Despite the Hong Kong government's move to impose a freeze on the supply of subsidized flats to boost the sluggish property sector, home owners saddled with negative equity remain bitter.
"I don't think I will get my investment back," lamented Clement Tang, a supervisor at a trading firm, referring to his 65m2 flat purchased for HK$3.5 million (US$450,000) just prior to the handover of the former British colony in 1997.
"It is an investment nightmare," Tang said of his US$10,000 monthly mortgage repayment burden. The amount is more than half of Tang and his wife's combined monthly income while the property is now valued at less than HK$2 million.
Like other property owners, Tang harbored no optimism over the government's latest moves, saying glumly: "I don't think the prices will go back up to its peak" reached in the mid-90's.
The property market, a pillar of Hong Kong's economy, has been in the doldrums since the Asian financial crisis struck in 1997.
Chief Secretary Donald Tsang's announcement that the government would suspend the supply of subsidized new units until June 2002, in a bid to boost the property market, did not herald a silver lining for long-suffering flat owners.
"There is an overlap in demand between the public and private housing sector and the government has to do something to improve the situation," Tsang said last week of the decision to implement the moratorium.
But Tsang admitted there was no magic cure to revive the ailing economy.
Last week, the government revised downward its growth forecast to one percent from three percent after it announced year-on-year growth in the second quarter had slowed to 0.5 percent.
By resorting to a minimalist approach to its housing policy, the government is hoping market forces will give fresh impetus to sagging confidence in the community.
The move was welcomed by property developers and agents, who nonetheless suggested the government go a step further and scrap the home ownership scheme.
The scheme was introduced for the "sandwich class" who earned too much to qualify for public housing but were also unable to afford a private sector flat as property prices soared in the 1990s.
However, property developers and agents were now confident prices would rise up to 20 percent in ensuing months, although far below giddy pre-1997 heights.
Peter Churchouse, managing director of Morgan Stanley Asia, said "the government should let the private sector decide in building housing."
He said the government's home ownership scheme was "unnecessary" at a time when property prices had slumped so dramatically.
"The so-called sandwiched class doesn't exist any more as property prices have fallen between 50-60 percent from its peak, making it affordable to all," he said.
"The government should recognize there is no need for subsidized flats," he added.
Churchouse predicted the moratorium could result in a 15 percent property price rise in months to come.
"Residential [mortgages] are at their lowest in the past 30 years, with the cost of owning an apartment lower than rents," Churchouse said.
Gordon Tse, manager of Midland Realty International's strategic development and research department, said: "The moratorium on subsidized flats has brought no visible changes in market sentiment."
"Hopefully, I expect transactions will rise between 10-20 percent in the coming months," in the primary market, he said.
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