Hong Kong developers keen to launch projects as government targets 83,000 new homes over next 3 years
Looming supply of a record 83,000 new flats in HK over the next few years is expected to spur sales rush ahead of slowing price growth
Hong Kong developers are gearing up to launch new developments for sale as the government's projections for a record supply of private homes over the next three to four years are likely to cap price growth, say industry experts.
In August alone, a potential total of 2,000 new flats are queuing up for pre-sale.
"Home price growth will slow from next year as an increased supply will hit the market then," said Sammy Po Siu-ming, the chief executive of Midland Realty's residential department.
On Friday, the Transport and Housing Bureau announced in its latest report that about 83,000 new private homes were projected to hit the market over the next three to four years, the highest level in almost 11 years.
"It is the first time the supply of private homes will have surpassed the 80,000 level since the government started releasing the data in the third quarter of 2004," said Buggle Lau Ka-fai, the chief economist at Midland.
He said the government's determination to increase land sales had started to take effect.
Wong Leung-sing, an associate director of research at Centaline Property Agency, expects the number of flats under construction to reach 18,000 this year.
By 2017, he believes the government could meet its annual target for new private housing supply of 20,000 units.
It took Chief Executive Leung Chun-ying's administration three years to achieve the housing target as it speeds up the pace of land sales.
Wong said the market should closely monitor the inventory figures once the government reached its housing target to avoid an oversupply.
"Currently, we have a stockpile of 5,000 completed flats, which shows the market is still healthy," he said. "But alarm bells will ring once the inventory builds up to more than 10,000, and 15,000 will be a dangerous signal."
He urged the government to keep a check on inventory levels instead of continuing to increase flat supply.
With increased land supply and strong demand, developers are expected to accelerate new launches.
Last week, the Housing Society sold 99 per cent of the 350 units at Heya Crystal in Cheung Sha Wan.
"Given the positive response to Heya Crystal and the improving secondary volume, we think developers will become more active in launching new projects in the coming weeks," said BNP Paribas analyst Patrick Wong in a research note.
The Housing Society will offer the first batch of 80 units in another Cheung Sha Wan project, Heya Aqua, for sale from Saturday at HK$12,594 to HK$16,909 per square foot.
Factoring in the maximum 10 per cent discount, the selling price will be HK$11,335 to HK$15,219 per square foot, or HK$5.13 million to HK$8.9 million.
After registering more than 4,000 potential buyers since the past weekend, the Housing Society has released the remaining 195 flats at Heya Aqua. The project is slated for completion in early 2017.
On Tuesday, Cheung Kong Property Holdings released the price list for the first batch of 66 flats at its luxury residential development in Hung Hom, Stars by the Harbour, at a discount of up to 16 per cent.
The cheapest unit on offer is a 1,356 sq ft flat at HK$22,706 per square foot, or HK$30.78 million. Factoring in the 16 per cent discount, the price will be reduced to HK$25.86 million, or HK$19,073 per square foot.
The developer opened the show flat for the 321-unit project for public viewing on Saturday.
Meanwhile, Henderson Land Development will post sales brochures for its 474-unit Double Cove Grandview in Ma On Shan on the government website shortly and Sun Hung Kai Properties will soon kick off promotion for the phase two development at Century Link, which comprises 932 units, in Tung Chung.