Henderson chief sees home prices steadying
Lee Shau-kee cites doubling of supply and high building costs as factors keeping homes in the mass market in a tight range for two to three years
Hong Kong housing prices will consolidate in the next couple of years, owing to an increased supply of flats and high construction costs, Henderson Land Development chairman Lee Shau-kee said yesterday.
"In the past few years, annual flat supply was about 10,000 units. In the next few years, annual supply will jump to 20,000 units," Lee told reporters at the firm's annual general meeting. The doubling of supply would bring the increase in home prices back to a reasonable level and squeeze developers' profits, he said.
"Developers will not make big profits," Lee said.
He cited Tseung Kwan O and Tsuen Wan as examples. Land cost in these two areas is about HK$4,000 to HK$5,000 per square foot.
Together with the construction cost of HK$3,000 per square foot, the total development cost is between HK$7,000 and HK$8,000 per square foot, which is close to the average selling price of flats in the area, he said.
However, Lee said, high construction costs would keep home prices in the city from plunging.
"Home prices on average will go up or down not more than 10 per cent in the next two to three years," he said.