Housing starts highest in 8 years
The number of construction starts on new flats in the city climbed to the highest in nearly eight years in the first six months of this year after the government increased land supply to cool down the overheated property market.
Transport and Housing Bureau data yesterday showed construction of a total of 10,200 new flats started in the first six months of the year, 36 per cent more than the 7,500 in the same period last year.
That is not only the highest level since the bureau started compiling figures in the third quarter of 2004 but also close to the total of 10,300 flats started in all of last year.
Although housing supply is increasing, Lee Wee Liat, head of property research at BNP Paribas Securities, said the city is still facing the problem of a housing shortage in the near future.
'The housing supply will not increase greatly, and annual housing supply will not be more than 20,000 flats a year,' Lee said.
'On the demand side, recent strong property sales have shown that demand for housing remains strong. Mainland buyers may come back to Hong Kong's property market in the second half after the central government relaxes liquidity.'
He expected property prices to rise a further 4 or 5 per cent after increasing about 9 per cent so far this year.
However, Buggle Lau Ka-fai, chief analyst at Midland Realty, expected property prices to remain flat following the increase in new housing supply.
'New housing supply will continue to increase in future, and developers will not be able to ask for a premium price for their new projects,' Lau said.
'It would be difficult for flat owners in the secondary market to raise the asking prices of their flats significantly.'
He said construction of more flats would start in the second half, while the total number started this year would be more than 17,300 flats. That would be the highest level in 10 years.
Flats available for sale - including those under construction, unsold units in completed projects and those in presale projects - reached 52,000. That is over 6 per cent more than in the first quarter.
However, the problem of short supply remains in the short run, despite the number of completed flats in the second quarter increasing by 183 per cent to 1,700 flats from 600 flats in the first quarter.
There were only 2,300 flats completed in the first half, 48.9 per cent fewer than in last year's first half.
Wong Leung-sing, an associate director of research at Centaline Property Agency, expected there will be 10,600 flats completed this year, 12.77 per cent more than the 9,400 flats finished last year.
'There are 53,000 flats under construction, the highest level since the third quarter of 2004,' Wong said.
'The housing supply has increased because the government has released development sites for sales since 2010.
'I expect the figure to hit a record high in the third quarter.'
He estimated 13,000 flats have been approved for construction but work has yet to begin on them.
'If these are included with the flats where construction has started, the total housing supply has increased to 65,000 flats. It is the highest level in more than four years.
'I think the supply will be close to 70,000 flats in the fourth quarter. It means there will be 16,000 to 22,000 flats completed each year in the next three to four years,' Wong said.
In 2016, he expects housing supply to reach the government's target of 20,000 units.
Number of flats completed in the first half of the year, 48.9 per cent fewer than in the same period last year