Financial Secretary John Tsang Chun- wah sees a greater risk of a property bubble after a strong rebound in the market.

Financial Secretary John Tsang Chun- wah sees a greater risk of a property bubble after a strong rebound in the market.

So the government is prepared to bring in measures to prevent it forming, he declared yesterday.

But Robert Ng Chee-siong, boss of leading developer Sino Land, said earlier he believes the boom is reasonable.

Tsang noted that property prices have risen by 47 percent in the past two years and luxury flat prices are 10 percent higher than in 1997. Small- and medium- sized flats, meanwhile, cost only 10 percent less than their pre-financial crisis level.

"The situation is indeed rare and is worrying," Tsang told legislators. "We will continue to monitor the situation and roll out new measures to make sure the property market develops in a stable and healthy manner."

He then warned people to think twice before they invest in property: "One should assess one's affordability and take into account different risks, such as rising interest rates."

The debt-to-income ratio surged from 32 percent in the fourth quarter of 2008 to 41 percent in the second quarter of this year, he said. "Increases in income cannot catch up with the surge in property prices."

Tsang said recent measures to clamp down on speculation have been effective.

Sub-sale, or confirmor, transactions, for example, were only 2.4 percent of total transactions in the first nine months of this year compared to 3 percent last year. To increase supply, the government will take a new approach on land- use issues and explore different ways to increase land supply.

One of the more acute problems is the shortage of medium- and small- sized flats, Tsang said. Still, the government has leverage over the Urban Renewal Authority and the Mass Transit Railway Corporation to ensure they supply such flats.

Secretary for Transport and Housing Eva Cheng Yu-wah then said that the new My Home Purchase scheme can be speeded up and expanded in accordance with public feedback.

Yet Sino Land's position is that after 13 years of vibrant economic progress it is reasonable for home prices to surpass the peak seen before the Asian financial crisis.

"After the handover in 1997, China's development was rapid and good," Ng said. "Why do we want prices to be lower than in 1997?"

But he does not have a crystal ball, Ng added, so he's not able to forecast prices to come. Nor is he able to define a property bubble.

While urging aspiring homebuyers to carefully assess their affordability, Ng also said it is unfair for people to think green-area concessions come for free since developers are willing to pay higher prices in land auctions after factoring in the extra profits.

Sino Land is "not afraid" of fierce competition, Ng went on, but he noted that it has not won any plots recently and that it takes time to develop sites bought in 2008 and 2009.

Nor does Ng think there is any hatred of developers in Hong Kong, citing it as a civil society.

Back at the Legislative Council, Secretary for Development Carrie Lam Cheng Yuet-ngor told lawmakers that the target of providing land for 20,000 housing units each year is not a cap, adding that "the chief executive would not be unhappy" if the final number exceeds the target. With regards to criticisms that some redevelopment projects became luxury flats, she said it would be unwise to stop cooperating with property developers.