HONG KONG, Feb 23, 2011 (AFP) - Hong Kong's financial chief vowed Wednesday to further boost the city's land supply in response to rising public anger over soaring property prices and repeated warnings of a looming real estate bubble.
Financial Secretary John Tsang also announced a set of measures aimed at easing the burden of soaring prices in the city, including energy and rent subsidies, as he warned that inflation would surge this year.
The decision to sell off more land is the latest by officials in the city of seven million, famous for its sky-high residential rents and super-rich tycoons, as they try to cool the overheated property market.
"We are determined to maintain the stable and healthy development of the property market," Tsang said in his annual budget speech, adding that the government would hold a series of land auctions this year to boost supply.
"The challenges in the coming year arise mainly from the risk of asset-price bubbles and inflation... Fighting inflation is our major task this year."
Authorities have announced a series of measures to stem the rise of prices in the densely populated city, including multiple land sales and tightening of mortgage lending, but they have failed to stem rising land prices.
The huge sums people are forced to pay for a home has led to public anger in Hong Kong, traditionally associated with laissez-faire economic policies, and a warning from the International Monetary Fund of a potential bubble.
The financial chief warned that "excessive" fund flows into Hong Kong had sparked "exuberant speculative activities" that could further push up already buoyant property prices.
Tsang said strong growth in mainland China and Asia helped Hong Kong bounce back from the global financial crisis "at a faster pace than expected" rate last year, growing 6.8 percent, more than the forecast 4.0-5.0 percent.
However, he said that as the economy grew last year consumer prices hit 2.5 percent and warned the inflation rate would surge to 4.5 percent this year.
In a bid to take some of the bite out of the growing prices Tsang said he would usher in a package of measures including an electricity subsidy for city residents and temporary government-funded rent payments for public housing tenants.
He said he expects the economy to grow up to 5.0 percent this year.
But a limping economic recovery in the West and Europe's sovereign debt crisis would blur Hong Kong's economic prospects in 2011, Tsang said,
"The relatively fragile economic recovery of the US and Europe will make this year a testing time for the export performance of Asia and Hong Kong," he added.
Renegade lawmaker Leung Kwok-hung, a regular government critic who has warned about rising living costs, was ejected from the legislative chamber Wednesday after loudly interrupting Tsang's speech.
Leung, wearing his trademark Che Guevara t-shirt, tossed bananas at Tsang before security guards hauled him away.