Private-sector housing starts fell further last year to the lowest level since 1996, reflecting developer caution. The number of consents to begin work on 27,274 flats was down by 13 per cent from 31,366 starts in 2000, according to government statistics.
The contraction - for the third consecutive year following a rebound in 1999 - came as no surprise to analysts because of continuing weakness in the property market and the sharp reduction in land sales and premium settlements.
Analysts expected new building activity to continue to drop this year unless there was a strong pick-up in developer interest in adding to land banks and closing premium deals for redevelopment projects. Last year, Government auctions managed to sell only 10 small residential sites, sufficient for just 1,000 units.
Weak land acquisition interest meant the Government's land income fell dramatically to just HK$9.79 billion for the financial year ending on Sunday. It was the lowest level in a decade.
As it normally takes a few months to process documentation to start work on new projects, last year's sharply reduced land sales will reflect in this year's activity, analysts say.
Knight Frank director of valuations Anthony Lau Chun-kuen said housing starts probably would fall further considering last year's reduction in land sales and premium settlements.
