Urgent need to restart Hong Kong land auctions

The one glaring omission from the policy address with regard to an increase in land supply and subsequent increase in flat supply was an unequivocal statement to immediately restart government land auctions.

It is well understood by all in the industry and also the public that there is no quick fix to the problem of increasing flat production in the short term as the new administration has, to a large degree, inherited the problem.

The policy address by Chief Executive Leung Chun-ying outlined initiatives to get more sites available for sale, but the government still seems to prefer the Sale by Application system and its rather tepid Sale by Tender List method, which continues to play into the hands of those developers with large land holdings who may still choose not to apply for sites, preferring to develop their existing land banks when they perceive the market to be right for them to maximise their profits.

There is nothing intrinsically wrong with that because that is what developers are there to do.

What is wrong is the government's inability to break this cycle by making as much land as possible available for sale in the open market and try to break the stranglehold a few developers now have over the residential market.

The market's reaction to the policy address is telling. Their reading is that there will be a continuation of the existing policies, which have to a large degree got us into the current mess we are in.

If the government were to announce an immediate start of land auctions this would send the strongest possible message that they were on the side of the public, not on the side of the developers.