THE mass residential market will receive a boost from the territory's construction boom in the next two to three years, according to a report by the Nomura Research Institute. Michael Green, executive director of Nomura, said high employment levels in the construction sector should provide sustainable demand for mass-market residential units. He said the airport project had effectively entered its second phase of construction, which would involve more labour-intensive activities. The year-on-year increase in construction employment of 12.9 per cent in the fourth quarter last year and the high construction employment vacancy rate of 59.3 per cent would begin to feed into private mass residential demand, he said. 'This process is likely to be sustained for two to three years,' he said. 'This will also facilitate a sound trading-up market, from mass-market ownership to middle-market ownership.' Mr Green said the demand for residential property would enable developers to sell their stock of new completions into a steady market. 'Developers are likely to watch prices closely in order to increase sales volumes when prices show a tendency to rise faster than the rate of inflation, and to cut back new sales when price rises drop below the inflation rate,' he said. Public housing tenants, who comprise about 45 per cent of Hong Kong's population, increasingly should be able to use existing savings to enter the private-sector, home-ownership market, he said. In turn, existing mass-market flat owners wishing to trade up to the middle market would begin to find it easier to sell their units. 'The recovery of the mass market as a consequence of increasing numbers of first-time, private-sector home buyers should provide impetus to the middle market, which has already begun to move again,' he said. Demand for mass market units also might be driven by the Housing Authority's investigation of the assets of public housing tenants. Previous estimates indicated that almost 11 per cent of public housing tenants also owned private flats. Mr Green said more demand would be created for mass and middle-market units as publicly-housed owners of private flats were required to reside in their own units. The displaced tenants would need to compete for a declining stock of units available for rent. Rents would probably continue to rise. He said the Housing Authority's process of evicting non-qualified public housing tenants should take two years to four years.