Will Hong Kong’s record supply of 98,000 new homes cool the scorching property market?
Hong Kong’s supply of new private flats will climb to 13-year high of 98,000 over the next three to four years, according to the latest quarterly data from the Transport and Housing Bureau, but the additional supply is unlikely to cool sky high home prices, say analysts.
The latest estimation was 2 per cent higher than 96,000 units projection in the first quarter.
Thomas Lam, senior director at Knight Frank, believes the city’s private housing supply will peak this year and next.
“Although the government accelerates land sales to boost new flat supply, sales in the secondary market have almost come to a standstill. It has had little impact on reining in home prices as demand will hardly be satisfied by new flat supply alone,” he said.
At the same time, developers are not in a hurry to offer price cuts on their projects in view of the strong demand.
Future home price movements could hinge on whether the government introduces further cooling measures, he said.
Centaline Property Agency’s latest Centa-City Leading Index, which reflects sales at 100 large housing estates across the city, edged up 0.46 points to 159.88 in the week ending July 28 from a week earlier.
Hong Kong home prices, already the world’s most expensive for an urban centre, have surged 10 per cent since January.
The surge in prices amid additional supply underscore the challenges facing Chief Executive Carrie Lam Cheng Yuet-ngor in addressing what’s been labelled as the biggest public concern among the electorate.
In the first half of this year, government data showed 8,800 units were completed.
In 2016, the number of private flats completed reached 14,600, the highest since 2014’s 15,700 flats.
Of the 98,000 units of new supply over the next three to four years, 29,000 are from government land sales where construction may begin at anytime; 61,000 have not been offered for presale and are still under construction, and 8,000 are unsold flats in completed projects, data from the Transport and Housing Bureau showed on Friday.
About 71,900 units with size less than 700 square feet, accounting for 74 per cent of total new supply, it said.
Wong Leung-sing, associate director of research at Centaline Property Agency, expects completed flats would number 18,722 this year.
“More than 6,400 units in projects under construction have not yet been offered on the market,” he said.
“It will be positive to the property market,” said Derek Chan, head of research at Ricacorp Properties.
He expects there would have 70 new projects involving 14,840 units available for pre-sale in the second half of the year.
These include 1,600 units at the fifth phase development in Lohas Park, Tsuen Kwa O ; 1,188 units Cullinan West phase three in Cheung Sha Wan and 953-unit Parc City in Tsuen Wan.
Since January, developers had released 28 projects of 14,966f units for sale in the market, it said.
Cliff Tse, regional director of valuation department at JLL, saidactual construction during the second quarter accelerated, compared to the previous quarter. However, the number by end of the second quarter was still far below the number for the same period of 2016.
The government indicated actual construction of private flats were 8,500 units as at June 30, up 240 per cent from 2,500 in the first quarter.
But the latest quarterly figure was 48 per cent lower than 16,200 units in the same period in 2016.