Hong Kong’s land supply for private flats may exceed target again in 2017-18

The land supply for private housing for the 2017 financial year is anticipated to be adequate to construct approximately 32,000 flats, surpassing the government target for the fourth successive year. The government’s plan to sell 28 plots of land for private housing in 2017-18 is estimated to provide nearly 19,000 flats, while the rest will come from railway property, urban renewal and private redevelopment projects. Although the total supply of 31,620 flats, the most since 2012-13, has again topped the target of 18,000 units, Secretary for Development Eric Ma Siu-Cheung did not guarantee to use some of those sites for public housing, even as the average waiting time for public housing hits four years and eight months, far surpassing the target of three years. “We need to keep a continuous and stable supply of private housing to ensure the market develops steadily,” he said. Ma mentioned the government had already recognized 26 new sites for housing development, which could require about 60,000 flats, with 80 per cent planned for the public sector. He added that the government had altered the use of four adjacent private housing sites in Kai Tak to public housing, which could provide about 6,000 flats.

Lawrence Poon Wing-cheung, a housing policy expert, approved it was necessary for the government to maintain land supply for the private sector even if it surpassed the yearly target of 18,000 units. “The property market is very sensitive to any government policy changes. If the government says it will give excess land supply from the private sector to build public housing, it’s most certain that property prices would be pushed up as a result,” Poon said. “We need to keep a continuous and stable supply of private housing to ensure the market develops steadily,” he said. The government’s current target is to supply 460,000 flats by 2027, with 60 per cent for the public sector and the rest private. Analysts said a sufficient supply would not fix the city’s housing problem.

Lau Chun-kong, head of the valuation department at JLL, stated the recent surge in land prices showed developers were eager to replenish their land banks. “It is still hard for home seekers to buy flats in the private sector,” he said. “The government should continue to increase land supply.” Ten of the 28 sites for sale are in Kai Tak, where mainland developers pushed home prices up by 27 per cent in just one month between December and January. Mainland conglomerate HNA Group paid a record HK$13,500 per square foot for its first site at Kai Tak in November last year, and then a month later broke its own record and won a second site for HK$13,600 per square foot.

This marked a 164 per cent jump from June 2013, when the first government site in the area was sold for HK$5,157 per square foot. Ma said he assumed more competition in the market would prove beneficial for buyers as long as developers put new flats up for sale as soon as possible. Regarding the trend last year of developers building flats under 100 sq ft, Ma said the government had no plan to impose any restrictions on minimum flat sizes at the 28 sites. He said there were no signs of micro flats dominating the market and the government would closely monitor the situation.

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