27 January 2015
Hong Kong’s residential prices continued to climb in 2014 despite various curbs imposed. With an intention to ease housing shortage, the HK government has set a new housing supply target for the coming decade at 480,000 units in this year’s Policy Address. The new supply target, at 20,000 private flats per annum, is 29% below the average supply per annum between 1980 – 2004. With home prices soaring last year, the market is urging the government to provide a more comprehensive land-supply timeline to stabilise the market.
The government has explored various ways to increase the land supply. In the 2015 Policy Address, the chief executive has put his focus on public housing, probably in view of the heated response to recent sales of the authorities’ HOS flats, soaring prices and deteriorating affordability. The intention of selling subsidised flats provides more opportunity for the low and middle-income families to buy their homes. However, the additional public housing supply will hardly affect prices of private homes, as the public and private sectors are different markets.
“Soaring prices result in deteriorating affordability. As the affordability of housing has become a growing issue, homebuyers have to compromise with smaller flats. Therefore, demand for small-to-medium sized flats will remain strong in 2015,” Joanne Lee, Manager of Research & Advisory, Colliers International Hong Kong explained.
“High construction cost and lack of supply – especially small-to-medium sized flats in urban areas will keep property prices high and help to stabilise prices at current levels. At the moment, there are no indicative signs of construction cost going down. And given that the long term occupier’s demand is far beyond the supply, we anticipate private residential prices will continue to grow this year at roughly 3-5%,” Antonio Wu, Deputy Managing Director of Colliers International Hong Kong said.