Increased homes supply ‘to have limited impact’

The special administrative region government will continue to increase land and homes supply this year to ease the heavy housing burden on residents.

The pledge by Financial Secretary Paul Chan Mo-po was hailed by market experts as a positive signal to tame skyrocketing property prices, but they warned that it could only have a limited impact.

Over the next five years, homes supply from the private sector will go up by 50 percent to 20,800 annually on average, compared with the annual average of 13,100 units from 2013 to 2017.

The projected supply from the first-hand private residential-property market in the next three to four years will remain at a high level of approximately 97,000 units, Chan said on Wednesday.

“The increased annual housing supply in the private sector will send a positive signal to the market that supply shortage is easing,” said Alva To, Greater China vice-president at Cushman & Wakefield.

However, the 50-percent rise is from a low basis, he added. In the 1990s, when the local residential market was on a healthy development trend, the annual average private unit supply stood at 26,900 units. The increase in the next five years, therefore, is not expected to represent an oversupply in the market and will not have a major impact on the private housing sector.

With homes sales having gone up by 12.6 percent to 61,591 last year, compared with 2016, Joseph Tsang, managing director at global property agent JLL, noted that although 20,000 flats were completed a year, it still failed to meet Hong Kong’s housing demand.

“The government should relax stamp duty levies and the loan-to-value ratio in the secondary market. Unlocking the potential supply of 1.2 million units in the secondary market will be the most effective way to lift housing supply and curb soaring prices,” he said.

In addition, the estimated public housing production for the next five years is about 100,000 units, of which about 75,000 are public rental housing units while some 25,000 are subsidized sale flats.

In the short-to-medium term, the government has pledged to provide 380,000 residential flats by rezoning sites, such as the Kai Tak Development Area and Anderson Road Quarry. For the medium-to-long term, the government will press ahead with a number of projects in new development areas, as well as railway property development projects, such as that at Siu Ho Wan on the northern shores of Lantau Island, to provide about 220,000 apartments.

K.K. Chiu, head of valuation and advisory services at Asia Pacific of Cushman & Wakefield, urged the government to consider developing agricultural and idle land sites, and speed up the approval process for land rezoning to release more land resources for residential development.

“The government could go into public-private partnership to speed up the development of housing units, for example, by offering a lower premium to developers if they help build the infrastructures on rural land, or build units designated for public housing in their projects,” he said.

Under the 2018-19 Land Sale Programme, 27 residential sites, capable of providing 15,200 residential units, including 15 sites rolled over from 2017-18, will go under the hammer. The Development Bureau will announce the land sale program for the next financial year today (Thursday).