HONG KONG ECONOMY
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Hong Kong economy

Hong Kong’s 2017 growth forecast could be lifted by half a percentage point, finance chief says

Paul Chan Mo-po says economy improving at faster rate than expected, also says government considering allocating more land for subsidised housing

PUBLISHED : Saturday, 22 July, 2017, 1:43pm
UPDATED : Friday, 29 September, 2017, 2:55pm

Hong Kong’s economy is growing faster than expected and the government could raise its forecast for the year by half a percentage point from the original 2 to 3 per cent, the city’s finance chief said on Saturday.

Financial Secretary Paul Chan Mo-po also said he was considering reallocating some sites originally earmarked for new private-sector homes for subsidised housing instead, as the amount of land supplied for private construction projects this year would be enough to exceed the government’s target of building 18,000 flats.

Speaking on a radio programme, Chan said the growth figure for gross domestic product in the second quarter of the year would not be as high as the 4.3 per cent seen in the first quarter, as the base figure on which comparisons were made had been unusually low in the first quarter of 2016. But he said overall growth in the first half was expected to beat forecasts.

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“There is a high chance I will revise the GDP growth forecast this year by half a percentage point in August,” Chan said.

“We can see the recovery in the tourism sector, and the retail sector is also steadying.”

He said growth in the economies of Hong Kong’s major trading partners such as the mainland, Europe, the United States and Japan had been reported as good when he attended the G20 summit of industrialised and emerging economies in Germany earlier this month as part of the Chinese delegation.

On the local property market, Chan said the tight supply of homes, which had contributed to sky-high prices, was easing.

Finance minister Paul Chan urges caution from Hong Kong homebuyers

He said there had been a staggering rise in applications to recategorise what plots of land could be used for, indicating developers were keen to build more flats, even at a higher cost.

Applications for a change of land use allow space previously set aside for other purposes to be reallocated for new homes, but developers have to pay the government an additional premium for the change.

Such applications made in the first half of the year involved moves to start construction on some 11,000 private-sector flats. That figure is much higher than the 10-year average of 4,600 units per year.

Chan said the total supply of new private-sector homes came to 16,000 flats in the first half, meaning the government’s target of 18,000 units for the whole year would definitely be met.

“Because of a larger supply, there may be fewer government land sales [for building private flats] in the second half of this year. In fact, we are looking into the possibility of changing some land earmarked for sale into subsidised housing,” Chan said.

“In the next three to four years, there will be a supply of at least 96,000 new homes coming to the market. There are also more than 20,000 units in developers’ hands. So the supply is much higher than in the past.”

He said home prices were very high, and called for caution in the market from would-be buyers looking to cash in.

“You can see the index on prices for second-hand properties already slightly easing,” he said.