93,000 new flats in next 3-4 years, highest level since 2004

Hong Kong developers will continue to adopt their low-price strategy, after government estimates revealed the potential supply of new flats is expected to hit 93,000 over the next three to four years, the highest level since September 2004.

The latest supply estimate from the Transport and Housing Bureau is the equivalent of an average 23,000 new flats per year.

With such an abundant supply of new properties, developers are likely to speed up project launches and prices will remain competitive, said agents.

On Friday, Nan Fung Development released its price list for the first batch of 138 units at its joint venture residential development, Ori, in Tuen Mun.

One of the 138 flats is being offered at below HK$2 million, while 54 per cent are priced at below HK$3 million. The 253 square foot units are being offered for HK$2.48 million, and price will be reduced to HK$1.97 million after factoring in a maximum 20 per cent discount, the company said.

“It is the first project launched for sale at below HK$2 million since 2014,” said Sammy Po, chief executive at Midland Realty’s residential department.

Two years ago, Cheung Kong put a HK$1.55 million price tag on its 177 square foot studio flats at Mont Vert in Tai Po.

Po now expects the Ori development to attract strong investor interest, given the smaller lump sum required.

“Developers will now speed up their sales, as market sentiment has improved,” he said.

Despite increasing new supply, home prices remained flat in June after rising for two consecutive months on an overall improvement in sentiment.

The Rating and Valuation Department’s latest monthly supplement showed the general price index for private homes remained unchanged at 275.5 in June.

“The US Federal Reserve’s decision not to raise interest rates on Wednesday could help further boost home buying desire,” said Po, who believes prices will continue to improve this month.

The home price index has risen 1.54 per cent since March, but the latest prices are still 10 per cent lower than their peak in September last year, according to government data.

The home rental index edged up 0.48 per cent to 165.1 last month.

Separately on Friday, Hong Kong Monetary Authority said the number of negative equity cases decreased to 1,307 in the second quarter of the year, from the previous quarter’s 1,432, as prices started to rebound since March .

“These cases were mainly related to residential mortgage loans under the mortgage insurance programme and bank staff housing loans,” it said.

The aggregate value of residential mortgage loans in negative equity fell to HK$4.45 billion in the period compared with HK$4.91 billion in the first quarter.