Supply of new homes in Hong Kong to remain tight in 2013

Despite a jump in building work on new flats, completions still well short of government target

PUBLISHED : Saturday, 26 January, 2013, 12:00am
UPDATED : Saturday, 26 January, 2013, 12:02pm

The supply of new private housing is expected to remain tight this year, property experts say, although the number of flats on which construction began or was completed rose last year.

Figures from the Transport and Housing Bureau yesterday show construction started on 18,600 new flats last year, the most since 2000 and an 80 per cent jump from 10,300 in 2011.

The number of new flats completed also rose, to 10,100 units from 9,400 in 2011. But the figure was still lower than the annual average of 18,113 over the past 15 years. It also falls short of the government's target of 20,000 a year.

Patrick Chow Moon-kit, head of research at Ricacorp Properties, said: "Given Hong Kong's population increases by 50,000 to 60,000 a year, and the number of households by about 30,000, only 10,100 newly completed flats cannot meet demand."

As the government started increasing land supply only in the final quarter of 2009, Chow said, it would not be until next year that the supply of new flats increased significantly, as it took about four or five years to build one.

He predicted that the number of flats completed this year will remain around 11,000. Chow said he expected home prices to increase by 5 to 10 per cent, mainly because of strong demand for homes and insufficient supply.

Wong Leung-sing, associate director of research at Centaline Property Agency, said the number of newly completed flats would rise to 20,000 a year only in 2015 at the earliest. He estimated that 13,000 private homes would be completed this year.

The housing bureau said there were about 4,000 unsold flats in completed projects at the end of last year. It said a further 15,000 flats could be built on sites where construction might start at any time.

Together with 48,000 homes that are still under construction and unsold, some 67,000 flats will be available in the coming three to four years, it said.

Midland Realty's chief analyst, Buggle Lau Ka-fai, said since there were only 4,000 unsold new flats, far fewer than the roughly 19,000 units in 2007, a vacancy tax on unsold new homes would not boost flat supply significantly.

The government has received nine bids from developers for a residential site in So Kwun Wat, Tuen Mun.

The bidders included Cheung Kong (Holdings), Sino Land, New World Development, Wheelock Properties, Nan Fung Development and K Wah International.

Ringo Lam Chun-chiu, valuation director at AG Wilkinson & Associates, said: "The response is quite good."

Lam said he expected the 290,000 square foot site, which can yield a gross floor area of 377,000 sq ft, to be worth HK$1.53 billion, or HK$4,060 per buildable square foot.

Since the winning bidder is required to build at least 460 to 480 home on the site, they would have to be flats with an average size of 800 sq ft instead of larger luxury houses.

Lam said this would lower the land price, as new flats in the area were selling at about HK$10,000 per square foot, while houses could be priced at HK$16,000 per square foot.

Midland Surveyors estimates the site will fetch a lower price of HK$1.2 billion, or HK$3,200 per buildable square foot.