Hong Kong housing

Hong Kong government exceeds annual private housing target with six months to spare

It provided land for 18,260 units from April to September, giving it room to slow down the supply of land in the coming months

PUBLISHED : Friday, 29 September, 2017, 8:52pm
UPDATED : Friday, 29 September, 2017, 11:28pm

Hong Kong’s government has exceeded its annual target of supplying 18,000 new private homes – with six months to spare.

It provided land for 18,260 units in the six months from April to September, the first half of the current financial year, according to figures revealed on Friday.

That has given it the breathing space to slow down the supply of land in the remaining three months of 2017, when less than 2,000 new flats are due to come on line.

Three residential sites in Kwun Tong, Sheung Shui and Kowloon Tong will be released for tender in the next three months, with a total capacity of 1,090 flats, said Michael Wong, the secretary for development, on Friday.

An additional 790 units will come from two projects to be released for tender by MTR Corp and the Urban Renewal Authority, raising the total supply to 1,880 flats. That’s about 72 per cent fewer than the 6,730 units to be constructed on land supplied in the previous quarter.

Hong Kong’s home prices, already the most expensive in the world, rose for a 17th straight month in August, with the data coinciding with a warning from the Hong Kong Monetary Authority (HKMA) of mounting uncertainties in the outlook for the residential market.

The home price index increased 0.4 per cent to 339.0, according to data released on Friday by the Rating and Valuation Department, indicating an acceleration in price appreciation from earlier this year. The city’s residential property prices have climbed 25 per cent since March 2016.

Price growth will slow in the coming months
Donald Choi, managing director, Nan Fung Development

Many analysts are predicting home prices will start to come down or at least plateau.

“Price growth will slow in the coming months,” said Donald Choi, managing director at Nan Fung Development.

On Thursday, Hong Kong’s central bank flagged concerns about inflated asset prices, noting the outlook was “highly uncertain” amid polarising forces ranging from rising interest rates and increasing supply to aggressive sales tactics by developers.

“The residential property market has become buoyant again since March, with property prices in the secondary market surpassing the peak in September 2015. Transactions in the primary and secondary markets also picked up,” the HKMA said in its “half-yearly monetary and financial stability report”.

“The rising property prices stretched housing affordability further. Partly as a result, it is more common for recent homebuyers to receive financial support from their parents or to take up high loan-to-value mortgages provided by property developers.”

Hong Kong’s record property prices push more millennials into mortgage debt

The report said the recent property market buoyancy had renewed concerns about housing affordability, as the income-gearing ratio reached 75 per cent in the second quarter, much higher than the long-term average of about 50 per cent since 1996.

In one sign that the market is losing none of its lustre, New World Development had sold 30 out of 50 units at its Parkville project in Tuen Mun as of 3pm on Friday after sales kicked off in the morning.

“About 40 per cent of our clients were born in the 1980s and 1990s, and half of them will rely on financial aid from their parents,” said Sammy Po, chief executive of Midland Realty’s residential market.