New World Development has demanded the Government be more flexible in its housing policy, saying the market could only absorb up to 50,000 private and public flats a year in a tough economic climate. Director Stewart Leung Chi-kin said the market would have been able to absorb the Government's targeted production of 85,000 flats a year if the economy had not been hit by the regional financial turmoil. At that time, rampant speculation created an imbalance in demand and supply, he said. Mr Leung emphasised that developers also did not want to see the return of speculators. 'But now the market is unlikely to support such a massive supply,' he said at the launch of the company's Belair Monte project in Fanling, a joint-venture owned by 11 developers. Over the past decade, the market had probably absorbed only 40,000 to 50,000 private and public flats a year, he said. He emphasised that New World was not asking the Government to abandon its 85,000 target but said market trends needed to be monitored closely. For instance, the Government could increase land supply if speculation returned to the market, he said. 'The Government holds all the cards in adjusting the land supply,' he said. Annual production in the private sector was between 25,000 and 30,000 flats, he said. Mr Leung forecast property prices would increase by 10 to 15 per cent next year, assuming inflation rose to between 4 and 6 per cent. 'It is unlikely for an international city like Hong Kong to have a flat inflation rate for a long time,' he said. He said the company had submitted its intention to bid for eight proposed Land Development Corp (LDC) projects on Wednesday. The LDC heard from 19 potential bidders. New World had also submitted a bid for another proposed LDC redevelopment in Mongkok, Mr Leung said.