Hong Kong's exports of building materials and hardware products to China will increase as the mainland property market makes a comeback, according to the Trade Development Council (TDC). A TDC report released yesterday claims exports will rise as sales of residential developments improve in the southern provinces. Changes in China's housing policy were also likely to increase the demand for exports. 'Housing reforms introduced by the government to gradually replace [state-provided] housing by private housing should stimulate demand for private houses,' the report says. 'In turn, demand for hardware, as well as DIY [do-it-yourself] products is also expected to grow at a faster pace.' But it says that in the longer term, manufacturers in Hong Kong will face more competition from their Chinese counterparts. Some SAR manufacturers had shifted their business focus to products with higher value-added components, with the aim of selling them in Europe and the United States. 'But markets in Asia outside Japan are still dominated by cost-conscious buyers,' the report says. TDC figures show Hong Kong's exports of building materials in the first eight months this year stood at HK$38.48 billion, a year-on-year increase of 14 per cent. But last year exports fell 4 per cent to US$51.7 billion. Exports to the mainland dropped 9 per cent to HK$26 billion. The TDC report was released at the opening of the Hong Kong Hardware, Building Materials and Home Improvement Fair.