Fine Tuning
Secretary for development Carrie Lam Cheng Yuet-ngor said this month that the government was planning to sell 47 sites in the 2012/13 financial year, starting in April, which will produce 13,500 flats.
“The availability of this large number of new residential sites for sale demonstrates well the government’s firm commitment to increase housing land supply,” Lam said. She added that if the sites were not sold, the government would transfer them to the Housing Authority for public or subsidised housing, rather than sell them on the cheap.
“We will continue to adopt a multipronged approach to expand land resources, and this work will not be affected by economic cycles or fluctuations of the property market,” Lam said.
Real estate experts feel the government may have adjusted its policy towards the property market.
“While the government has put forward 47 sites for sale this year, very few are in the luxury bracket, while the vast majority are for the mass market in the New Territories,” says Charles Chan, managing director for Savills Valuation.
“The new government supply suggests the shortage in supply of luxury properties will remain, though there will be more supply of housing for the mass market. This suggests a further polarisation of the high-end and the mass market in terms of prices.
“I think the adjusted policy is to focus on people’s livelihood. The objective is now to cool down prices for the mass housing market, so housing won’t become too expensive for most people. The focus is to solve a livelihood problem.
“The lack of new supply of luxury property is a ‘good signal’ for the market. For the luxury market, the government seems to be interfering less. For the housing needs of the wealthy, the government is leaving it to the market,” Chan says.
Five of the government sites for sale will be on Hong Kong Island, five will be in Kowloon, with 37 in the New Territories.
From April to June, the government will put on sale by tender four residential sites in Tseung Kwan O (two), Sha Tin and North Point, which could provide a total of about 1,400 flats. Minimum flat number requirements will be imposed on the Tseung Kwan O and North Point sites. Later in the financial year, two sites in the Kai Tak development at the old airport have become available for the first time, which could produce 1,000 units.
In addition to the government sites, other new supplies include property projects by the MTR, redevelopment projects by the Urban Renewal Authority and projects subject to lease modification or land exchange. The government says the total housing supply in the coming financial year will produce 30,000 units.
That figure may not be achieved, however, because it is unlikely all of the government sites will be sold, and some may not even be ready, argues Lau Chun-kong, international director and head of valuations at Jones Lang LaSalle.
“The effective supply is likely to be just over 20,000 units. The market should have no problem absorbing that figure,” Lau says.
The 47 sites available this year is less than the 52 last year, which could be built into 16,000 units. Experts believe only about half were sold.
Lau believes the new flats are only adequate to meet the needs of the increase in population, and they only make up a small percentage of the total
housing market in Hong Kong. “There are about 1.2 to 1.3 million units in Hong Kong, so the new supply only makes up about 2 per cent.”
Lau points out that in the rush to complete a larger number of flats, the government is limiting the size of units in some sites, so that more units can be built in the same area. The result is a further shortage of large units for the luxury market.
He forecasts the shortage in luxury housing will continue in the coming few years.
“Based on the Rating and Valuation Department’s class E classification of large luxury properties, there will only be 520 luxury flats completed in 2012, with the number falling to 210 in 2013, and less than 200 in 2014.”
But he expects prices will be under pressure this year, because of the challenging global economic outlook, and lay-offs in the banking sector.
