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Decline in new flats expected to continue

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Newly completed office space is seen rising to nine-year highs by next year

The number of flats completed is expected to dip to 12,740 this year, the lowest level in more than a decade, while the amount of completed office space will probably surge to nine-year highs by next year, the government says.

The amount of commercial space newly completed is also forecast to shrink to 52,000 square metres this year, down from 183,000 square metres last year. This year's supply will be the lowest in more than 10 years.

Deputy Commissioner of Rating and Valuation Mimi Brown played down concerns over the expected drop in flats coming on to the market this year. She said it was estimated more than 16,000 would be completed next year, which would be in line with expectations. The number of new homes has been steadily declining since 2002, when 31,050 flats were completed.

She declined to forecast movements in housing prices and rents, saying it depended on the market.

'Overall home prices in the fourth quarter of last year compared to a year ago rose 3 per cent while rents increased 5 per cent. I think this reflects the strong economic growth and is a normal development,' Mrs Brown said.

Year on year, prices for flats smaller than 1,076 sq ft were flat, rising only 0.67 per cent, although rents rose 5.8 per cent. For larger flats, prices rose 2.4 per cent while rents were up 7.1 per cent. Average housing prices and rents rose 0.7 per cent and 5.9 per cent respectively. Rent tends to lag behind housing prices.

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