Press Releases New information regime needed to protect private residential property purchasers (July 26, 2010) Executive Summary The Consumer Council has called for a new regime of information dissemination to the public in respect of the private residential property market. It has put forward a package of 9 recommendations to encourage the flow of reliable and timely information in the first-hand private residential property market in Hong Kong. In its report entitled "Building a Property Market Information Platform for Home Purchasers" released today (26 July 2010), the Council has recommended, inter alia, the creation of a centralized online " Property Market Information Platform " (PMIP) accessible to the general public. The Council welcomes successive initiatives launched by the Government, part of which have achieved initial impact to enhance the transparency and clarity of property information on uncompleted first-hand residential properties. To build on the existing safeguards, the Council has made suggestions to further enhance information transparency in the first-hand residential property market to better protect the interests of prospective purchasers. At present, prospective purchasers of the first-hand residential properties face an asymmetry of information when compared with developers and sales agents. Prospective purchasers are not likely to be in a position to get clear, accurate and comprehensive information before making their purchase decisions, which is likely to be the single most expensive purchase in their life. The proposed PMIP is an online platform that offers one-stop service, which will pull together existing data of developers on individual development project basis and relevant information provided by various government departments. The arrangement will enable the general public to obtain comprehensive first-hand private residential property market information. The information of current transaction prices and unit availability should be made available within 24 hours (real time in the long run) on the PMIP and at sales offices for prospective purchasers to check before entering into an agreement with the developer. "To ensure the platform a reliable and credible one," said Mr. Ambrose Ho, the spokesperson for the Working Group on Consumer Issues relating to Residential Property, "we propose that the platform should be set up and managed by an authoritative and independent body, e.g. the Government, to give the public the assurance that the market information they receive is reliable." "The platform will also enable the Government to monitor transactions in the first-hand private residential property market," added Ambrose Ho. Similar information platforms exist in other countries and cities such as Singapore, Beijing, Guangzhou, Hangzhou, Shanghai and Shenzhen. Taiwan has also recently announced the intention to introduce such a platform. The Council's study aims to look into the availability and reliability of property market information. Council staff visited 19 private residential developments from April to June this year to examine the accessibility of information for property buyers. During the field visits over that period of time, a number of problem areas have been identified: the absence of comprehensive information source; information disseminated varied in degrees of reliability (if not misleading or deceptive); units released for sale in small batches; and high pressure sales tactics creating anxiety and confusion to buyers. To address these concerns, the Council has proposed a package of recommendations covering several specific areas: Clear guidelines regarding pre-launch activities of first-hand properties 1.    Refrain developers and sales agents from releasing non-official "intentional prices" or using any other imprecise terms relating to the potential price of flats to be offered for sale before an official launch of flat sales. If 'private sales' are to be allowed, they should be more properly defined, and an upper limit on the percentage of units available for private sale should be reinstated.   Removing impediments to viewing of show flats 3.    Introduce measures to ensure that prospective purchasers have sufficient time for viewing of show flats.   Controls over unreliable and deceptive representations 4.    Refrain sales agents from distributing unauthorized materials (i.e. their own materials) to prospective purchasers at sales offices, unless there is an accompanying statement quoting the date and the source of information.   Provision of timely and useful transaction information 5.    Establish an online "Property Market Information Platform" (PMIP) that enables the general public to obtain comprehensive property market information regarding the first-hand private residential properties.   Provision of sales brochures and price lists 6.    Require that price lists and sales brochures are available at sales offices for distribution to prospective purchasers at the time of sale and before viewing of flats. 7.    Shorten the time gap (currently up to 5 days) between the sale of a flat and the release of the transaction record on developers' websites and the proposed PMIP.   Complete information on price and units for sale 8.    Require that a facility for prospective purchasers to examine the PMIP be provided at the time of sale.   Strengthen the existing complaints handling mechanism 9.    Introduce an element of neutrality in the preliminary complaints screening process of the Real Estate Developers Association of Hong Kong (REDA). The Council considers its recommendations to be both pertinent and proportionate in protecting consumers who are buying what is likely to be the single most expensive purchase in their life. The Council will follow up with relevant policy bureaux on the feasibility of implementing the recommendations. Issued by Consumer Council 26 July 2010   Sup plement: Property Market Information Platform (PMIP) First proposed in 1996, the Consumer Council urged the Government to improve the flow of property information by setting up a centralized property information platform to provide accurate, update and authoritative information for public use. The PMIP should pull together existing data of developers on an individual development project basis and relevant information provided by various government departments. Information / data to be available on the PMIP : Market trend - General property market statistics and information, including development projects in the pipeline, expected date of completion, number of units etc. Pre-sale stage - Details of individual development projects such as property name, location, total number of units in the project, sales brochures, etc. Offer stage - Developments on offer in the market, sale status, sale launch date, number of units launched for sale and their prices, unit size, etc. Post sale stage - Transaction date, transaction price, price per square foot, payment terms, number of units sold, cancellation rate, etc. The PMIP should provide a timely benchmark of current transaction prices and units available concerning residential development projects. Information should be posted within 24 hours (real time in a long run) after signing of Preliminary Agreement for Sale and Purchase or Agreement for Sale and Purchase. The Council understands that the establishment of the proposed PMIP requires immense manpower and capital resources, and professional know-how to collect, verify and update information. There is also the issue of legal liability on the accuracy of the information. But the benefits of such a platform to various parties as well as to the economy as a whole should not be brushed aside.