Chief Executive Leung Chun-ying today announced a series of measures concerning the government’s housing and land planning in his Policy Address for 2015, including broadening subsidised flat scheme, long-term housing target, and new land development. Knight Frank believes that the Policy Address on housing has set a right direction; however, it does not mention much on implementation, in particular the long term land supply. In short term, the residential prices growth will not be hindered.
Highlights of the 2015 Policy Address:
1) A pilot scheme proposal for public rental housing (PRH) sale to eligible applicants (existing PRH tenants) and waiting list applicants for PRH.
2) Set the total housing supply target for the coming decade at 480,000 units.
3) Take forward development of Lantau Island, development of Tung Chung New Town Extension, and establishment of a commercial hub in Tung Chung East.
4) Development of “brownfield sites” in Hung Shui Kiu, Yuen Long South and New Territories North, with a view to taking forward the development of New Development Areas (NADs).
5) Accelerate development in Kowloon East, by considering the release of land occupied by government facilities in the area, and continuing to take forward the Kai Tak Fantasy project.
Regarding the government’s plans to offer a new type of subsidised sale flats targeting Green Form applicants under a pilot scheme, Alnwick Chan, Executive Director at Knight Frank, believes that the impact to the overall residential market will be minimal as the number of units offered under this scheme is limited and this will only satisfy the purchasing needs of some buyers. Alnwick is concerned about the sustainability of this pilot scheme, as the Policy Address does not mention whether it is a one-off scheme or a long term plan. If this pilot scheme works, Alnwick believes the government may adjust the building standards and unit sizes, in order to provide more small units and reduce the construction costs of Home Ownership Scheme (HOS) flats. Alnwick stresses that the government should strengthen the functions of Housing Authority so that it facilitates the launch of subsidised sale flats to the market.
"Commenting on government's target of building 480,000 public and private residential units in the next 10 years, which was already mentioned in last month’s Long Term Housing Strategy, David Ji, Director, Head of Research & Consultancy, Greater China at Knight Frank reckons that the government will be able to meet the housing target between now and 2019. However, for the situation after 2020, it will depend on whether the Government can change the land use of some Government, Institution or Community (GIC) and Green Belt sites.
Thomas Lam, Senior Director and Head of Valuation & Consultancy, Greater China at Knight Frank, agrees with taking forward the development of Lantau Island, development of Tung Chung New Town Extension and establishment of commercial hub in Tung Chung East. “With the completion of the Hong Kong-Zhuhai-Macao Bridge and the Tuen Mun-Chek Lap Kok Link, Tung Chung will become an important transportation hub to Mainland China, and this supports the government’s intention to develop North West New Territories with huge potential in the future. In fact, the government should speed up the development in Lantau Island so that it serves as an important source of long-term land supply in Hong Kong.”
In the Policy Address, the importance of Kowloon East as an alternative core business district is also being emphasised. Thomas Lam adds, “To promote further development in the Kowloon East, the government should improve accessibility among buildings in the area, and reduce traffic congestion issues. As an example, the government can waive the land premium for building footbridge facilities, in order to encourage private property owners to improve facilities in the area.”
Besides, Knight Frank noticed the Policy Address did not mention the property market cooling measures, in particular Stamp Duty, which was implemented for a period of time. David Ji said, “Since Hong Kong property price is still rising, we understand the government’s stance to maintain cooling policies for the residential market. However, we think that the government should start to consider relaxing the Double Stamp Duty for commercial properties, as this will increase liquidity in the investment market. Hong Kong’s success has been based on a free market economy, therefore reducing market interference would improve market efficiency, and hence reduce business expenses and support economic growth in Hong Kong.”