The planned sale by the government of five housing plots between October and December will further dampen property market sentiment even though they will yield fewer flats than sites sold earlier this year, analysts say.
'With a flood of new land supply and project launches hitting the market over the next three months, we envisage that buyer sentiment in the residential market will take another negative turn,' Samsung Securities' analyst Patrick Wong Chi-leung and his team noted in a research report.
Secretary for Development Carrie Lam Cheng Yuet-ngor announced on Friday the sale by tender of the five plots, and said their development would provide some 1,770 flats.
This compares with the eight sites being sold in the current quarter, which are expected to yield 6,000 flats, and the nine sites sold between April and June, which will add about 3,000 flats to the housing stock.
The sites being offered in the coming quarter will be sold by tender instead of at auction, given the lacklustre response from developers to recent land auctions. Two weeks ago, a site at Tseung Kwan O was sold at auction for HK$3.12 billion, 2.5 per cent below the lowest forecast and 24.3 per cent below the highest forecast. That followed the sale of a site for luxury housing in Kau To, Sha Tin, and that of a commercial-residential site in North Point's Oil Street, both of which fetched prices below market forecasts.
Despite the poor results, the government has pledged there will be a continuing supply of land for construction. It hopes to make two more sites at the Tsuen Wan West station on the West Rail Line available for sale in the next three months. These will provide 3,326 flats.
'The government has bowed to political pressure to maintain a steady supply of land,' said Dr Lawrence Poon Wing-cheung, a spokesman for the Institute of Surveyors. 'This will affect developers. Given the new and continuing supply, as well as the uncertain economic situation, the prices of these newly available sites will be low.'