Hong Kong’s housing land supply shrinks to 10-year low, setting the stage for home prices to spiral in one of the world’s costliest cities

The city’s government will release two sites capable of accommodating 200 flats for sale in the fiscal second quarter starting on July 1

Total housing supply could top 7,050 units this fiscal year, inclusive of 5,200 new flats and 1,650 units from the first quarter

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The Queen’s Hill House public housing estate under construction in Fanling by the Hong Kong Housing Authority, on January 8, 2021. Photo: Felix Wong

Published: 9:07pm, 29 Jun 2021Updated: 11:59pm, 29 Jun 2021

Hong Kong’s supply of residential land is shrinking to a 10-year low, as the local government runs out of usable plots for building homes, in a situation that may set the stage for property prices to rise further and fuel public grief in one of the world’s least affordable urban centres.

The city’s government will release two sites capable of accommodating 200 flats for sale in the fiscal second quarter starting on July 1, according to Hong Kong’s Secretary for Development Michael Wong, similar to the same period last year when land supply was just enough to build 160 flats.

With the dismal supply, local authorities will have to turn to the subway operator MTR Corporation, the Urban Renewal Authority (URA) and private developers for new homes to meet demand in the city of 7.5 million people. Total housing supply could top 7,050 units this fiscal year, inclusive of 5,200 new flats from other sources and 1,650 units from the first quarter, bringing the total to about 55 per cent of the target of 12,900 apartments.

“It is shocking” for land supply to plunge to such a level, said Vincent Cheung, managing director of Vincorn Consulting and Appraisal, adding that developers could slow their conversion of farmland or industrial parcels into housing during bull markets to create supply volatility. “It is not a good sign as we are heavily reliant on private developers who are primarily profit-driven, instead of helping the government meet the housing supply target.”

“Hong Kong’s sky-high home prices will further frustrate the younger generation, and may even drive some to leave the city as their chances of getting on the housing ladder remains slim,” Cheung said.

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