The Government has postponed the tender of a subsidised housing development site in Kwai Chung in what is seen as a further attempt to cut supply and support the property market. The tender for the 0.47 hectare Private Sector Participation Scheme (PSPS) site was due to have been gazetted yesterday. A spokesman for the Lands Department said the tender had been delayed for 'technical reasons' but did not elaborate. The decision came a day after Chief Executive Tung Chee-hwa confirmed the Government had abandoned its target of building 85,000 homes a year. PSPS contractors said they were not surprised by the decision and were 'prepared for the worst' following the announcement of a planned cut in subsidised flat sales. Two weeks ago the Housing Authority said 16,000 Home Ownership Scheme (HOS) flats intended for sale would be rented. PSPS sites are sold to builders who develop the flats and sell them back to the Housing Authority at a pre-determined price. The flats are then sold under the HOS at discounted prices to qualified buyers. A spokesman for the Housing Authority said there was no connection between the Kwai Chung tender delay and planned cuts in production of HOS flats. Another PSPS site in Tsing Yi, which closed for tenders in February, had also been delayed due to 'technical problems', causing the Kwai Chung tender to be postponed, the spokesman said. Analysts said the Housing Authority's proposal to cut production of HOS flats would definitely have an impact on PSPS developments. Charles Chan Chiu-kwok, executive director of property consultants Chesterton Petty, said it was reasonable to delay the tender of the PSPS site given the abundance of HOS flats on the market. Chartered surveyor Pang Shiu-kee said the delay and the resulting decrease in supply of flats, would help stabilise the declining prices of mass-market private and HOS flats. There are three PSPS sites due to be offered for tender in this year's land sales programme. The Kwai Chung site is the smallest of the three, with a potential gross floor area of 279,266 square feet. The other two are a 4.08 hectare site in Sha Tin with a potential gross floor area of 2.83 million sq ft and a 1.74 hectare site in Tseung Kwan O with a developable floor area of 1.4 million sq ft. The Sha Tin site is scheduled for tender in September and the Tseung Kwan O lot in January. It is uncertain whether these sales would be postponed. Analysts said the two large sites, if released on schedule, would impact negatively on market sentiment as supply would continue to be large. The Government postponed the tender of a prime luxury residential site in King's Park Rise for one week following a poor land auction result in April. The site eventually was sold to a consortium led by New World Development and Sino Land. Some contractors said they were not surprised by the Government's decision to delay the PSPS site sale. 'Most of us have prepared for the worst,' one contractor said. 'Ever since the announcement of a cut in production of HOS flats, we contractors know that these will be the toughest days in our business.' The Lands Department released five PSPS sites for tender, including the Tsing Yi lot, last financial year. Analysts said blocks developed on PSPS sites were different from the standard Authority blocks and were mainly targeted for sale.