Highland Price Policy” is finished

The cornerstones of the four major economic miracles of Hong Kong are British governance, simple low taxation, free trade port policy, and high land price policy. Over the past 100 years, the “high land price” has been the support of the top three cornerstones. It is because of the high income to sell land for the government treasury to bring sufficient income, it can take a low tax rate internally, and exempt from customs duties, while maintaining conditions. Good governance. But things are extremely counter-productive, high land prices to a point, and now in turn shake the social and economic foundation. Moreover, the source of income of the Hong Kong Government has become more diversified. The Treasury has been flooded for years and does not have to rely on land sales. The Chief Executive, Mrs Lam, has a dazzling array of “six strokes”. However, the removal of the “Whole Color Water” trick has hidden a very important signal, which is to bury the “high land price policy” into a century-old grave.

Land sales revenue is not important

The high land price policy has never been an explicit policy and has not been written into any policy document. Successive governments have even denied that such a “policy” exists. It should be said that this is the long-term policy direction. The Hong Kong British Government first auctioned land in 1841 (covering more than 400 sites from Causeway Bay in the east and west to Sheung Wan). By 1984, it would not sell more than 50 per year. The hectares are written into the Sino-British Joint Declaration, and after the reunification, there is a deep consensus within and outside the ruling and opposition, even embedded in DNA, which is regarded as “core value”, and generally maintains the free market and defends the spirit of the legal system.

From the perspective of subjective willingness, the Hong Kong British Government has colonized Hong Kong since 1841, and it is necessary to develop this small island of Muir into the Far East Free Trade Port to serve the interests of the British Empire. In order to achieve the goal, it is inevitable to provide adequate infrastructure and efficient government governance. While it is in need of wealth, but at the same time, in order to attract trade in the region, no heavy tax can be imposed. In this context, high-priced land sales have become a viable route. Of course, with the general trend of the Asian economy as a whole, and the Chinese people’s unique feelings about the “bricks”, they can push the “high land price policy” to the extreme. It is unparalleled in the world.

However, the extremes must be reversed. The high property prices derived from high land prices are getting out of control. The latter has evolved into an independent trend. Even the government can’t control it. The dog’s tail has become a tail dog, which is in turn shaking the social and economic foundation.

Six strokes to the Singapore model

On the other hand, Hong Kong has long been more than a free trade port. It has become an international financial centre and wealth management centre. The revenue of government treasury has become more diversified. The ratio of land sales revenue to government revenue in the 1990s was as high as 60% in the 1990s and was reduced to about 20% in the fiscal year of 2018/2019. Even if the property stamp duty income of about 50 billion yuan was taken into account, the total revenue was still less than 30%. At the same time, the Treasury has been flooded for years, and now has more than 1.1 trillion yuan of fiscal surplus reserves.

Of course, it does not mean that the Hong Kong Government can completely abandon the income from land sales. Instead, it does not have to regard it as a “big artery”. It can conditionally sacrifice some (or even most) land sales to achieve other policy objectives. In short, it is relieved. “Difficult housing is difficult.” The problem is that under the old free market mechanism, even if the Government is willing to “sell land” to developers, it cannot guarantee that the Development Chamber will “sell flats” to the public. On the contrary, the land sales revenue sacrificed by the Government will probably only The “benefit” of the developer and the inability to effectively convey it to the public is that the original intention of the policy cannot be achieved.

For this reason, the “six strokes” may seem dazzling, but what is vacant tax and the modification of pre-sales of pre-completed flowers are purely tricks. The real trick is to reduce the price of HOS flats from 30% to 50%, and 9 Private land (including 10,600 units) was converted into public housing (including HOS flats), and the proportion of public and private housing in the future will be changed from “June 4th” to “73”, and “Boldly speaking” is mandatory. Sea made land. The combination of these two measures is an extremely important signal. It symbolizes that the Government is willing to sacrifice land sales revenue (including HOS sales revenue) and at the same time, by building public housing, bypassing developers and directly “letting profits” to the lower and middle classes. The public will help relieve the people’s hardship.

Developers lack flour or have to compromise

More directly, this means that Hong Kong will officially move to the Singapore model. The Hong Kong Government will become the largest real estate developer with 70% of the housing supply. The cake left to private developers will be reduced to 30%, and mainly in the mid- to high-end market, so it is good at building boutique luxury houses. Real estate developers will have more room for development. The developers themselves will undoubtedly have land reserves, but the “cooked land” soil reserves can be developed for a maximum of two or three years. As for the agricultural land yet to be converted, it depends on “public-private partnership”. As the Government reduces the sale of cooked land, the developer “flour shortage” is weak or forced to make greater compromises.

Before Lin Zheng announced the “six strokes”, she went to Beijing for a temporary visit. She later took the initiative to smile at the media. “Some people think that Beijing thinks that the housing policy I am doing is too hot, hitting real estate developers, and calling me up.” In fact, the more likely situation is that Lin Zheng wants to open the “high land price policy”. After all, it is a policy direction for more than a hundred years. It is not a big deal. It is not excluded to ask the boss to go to Beijing. But as mentioned above, when the time has changed, the policy has long had no value, depending on who sent it on the road. It coincides with the fact that today’s Sheng Shang insists that “the house does not live,” and then the officially buried the “high land price policy” into the historical tomb.