The government aims to raise the new housing target to 480,000 from 470,000 over the next 10 years. Photo: Dickson Lee

Land supply for private homes to exceed target by 10pc

Development chief says a total of 20,700 new flats will be available in the private sector next year, which exceeds the target by 10 per cent

Land supply for new homes in the private sector will not only beat estimates for the first time since Chief Executive Leung Chun-ying took office in 2012, but is also set to exceed the target by 10 per cent, according to the city's development minister.

Market watchers attributed the faster land sale to the government's release of large sites at lower land premiums and its pressure on MTR Corp to speed up land sales.

With the four residential sites to be released between January and March, 20,700 new flats will be available in the private sector for the fiscal year to March 2015, the highest level since 2010, Secretary for Development Paul Chan Mo-po said yesterday. That would be about 10 per cent higher than the historical annual average of 18,800.

The government aims to raise the new housing target to 480,000 from 470,000 over the next 10 years.

The increase in land supply comes at a time when Hong Kong home prices are climbing to fresh highs. Analysts believe prices would continue to increase as the new supply will not hit the market until late next year.

Alvin Lam Tsz-pun, a director at Midland Surveyors, said the government had been able to meet its target because the city's rail operator managed to sell three large sites after the Lands Department slashed the land premium.

Last month, MTR Corp sold a site in the fifth phase of Lohas Park to Wheelock Properties at the lowest price in 10 years in that area, at a land premium of HK$2.06 billion, or HK$1,874 per square foot.

"As the government has missed the target in the past two years, this year's 10 per cent extra is just playing catch-up with the previous shortfall. It will have little impact on home prices," he said.

Centaline Property Agency said its latest Centa-City Leading Index, which tracks secondary home prices at 100 housing estates, rose 0.91 per cent week on week to 132.81 for the week to Friday. The index has risen 11 per cent so far this year to a new record high.

For the three quarters to December, enough land has been sold to make way for 17,900 flats. Of this, 34 per cent would come from MTR Corp's 2,900-flat Tai Wai Station, 1,600-flat Lohas Park fourth phase and 1,600-flat Tseung Kwan O fifth phase. The Urban Renewal Authority sold another 1,700-flat site in Kwun Tong.

However, the development minister said the supply from MTR and the URA will come down in the next fiscal year between 2015 and 2016, but the government will increase supply from other sources.

Citing the official projection that 74,000 new private residential properties would come on the market in the next three to four years, the development minister said that level of supply would be much higher than the annual average of 9,500 flats over the past five years.

Chan added that there might be room to reallocate some of the sites for public housing use.

To increase housing supply, the government has asked MTR to study the feasibility of residential development in Siu Ho Wan on Lantau Island, which houses a railway depot.

MTR yesterday said it had received 23 expressions of interest from developers to build a large-scale residential project at Lohas Park.

The number of flats at the sixth phase of Lohas Park would increase to 2,400 from the originally planned 1,500, yielding a total gross floor area of 1.47 million square feet. But the latest plan will have the unit size reduced to about 600 sq ft each, from 980 sq ft.

"The trend is to increase supply of small units as the government releases more sites designated for mass homes," said Victor Lai Kin-fai, chief executive of Centaline Professionals.

This article appeared in the South China Morning Post print edition as: Land supply for new homes set to increase