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1 of 1Private housing construction in the city has jumped 80.9 percent to 9,762 units last year, up from 5,397 units in 2010, indicating that developers are accelerating their development pace as the government boosts land sales to curb property prices.
According to the Buildings Department’s Monthly Digest released on Tuesday, work in four projects to produce 1,461 units had started in Hong Kong in December. Together with commencement of the work to develop 8,301 units in the first 11 months, the total 9,762 new units in 35 projects last year were the highest number recorded in the past four years.
Previously, there were only 6,988 and 7,366 units developed in 2008 and 2009 respectively following the economic crisis.
The increased number of new housing construction last year implies that the government’s effort in boosting land supply has borne fruit, Buggle Lau, chief analyst at the Midland Realty told China Daily.
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To ensure an annual supply of 20,000 flats in the city, the Hong Kong government has vowed to maintain a relatively fast pace of increasing land supply in the city, a move which has contributed to stabilizing the city’s home prices. During the first three quarters of this fiscal year ending on March 31, 2012, it has sold 22 pieces of land that is estimated to provide 7,400 units of residential flats.
Despite new home construction last year on land that were sold earlier, Lau indicated that the government’s active land sales will also accelerate the city’s developers’ progress in building flats as more new supplies are due to come.
However, Wong Leung-sing, associate director of research at Centaline Property Agency Limited said the faster housing construction last year is also a result of developers’ generous purchases before 2008 when the city’s property market was in another boom.
Since the housing construction period lasts between four to seven years, developers are unlikely to forecast the market prospects when construction is underway. Wong believes the number of new home construction each year is more like an automatic reflection of the land sales situation half-decade ago.
“We will see even more construction activities in 2012 as land sold in the past few years are likely to be put into use, and the peak of new completed home supply is expected to come about in 2016,” said Wong. Both Lau and Wong nevertheless hold similar views that the faster new home supply in the future will not hit the city’s property market despite the present decline of home prices.
However, a Cushman & Wakefield report released on Monday estimates that the city’s mass home prices will fall by up to 15 percent this year, while the luxury properties costing over HK$30 million will experience an adjustment of 5 to 10 percent over the period.