_Hong Kong's residential supply to reach record high of 96,000 units in next 3-4 years

Residential sales rose another 20% month on month in April 2017, reaching 7,060, the highest level since October last year. An abundance of new flats were launched during the month, with developers offering various sweeteners, resulting in a high proportion of primary sales – 38% of the total.

May 26, 2017

Official data show that home prices continued to climb in the 12 months ending March 2017, gaining an accumulated 18%, surpassing the previous peak in 2015.

The government restated its firm stance on cooling the residential sales market last month, by reminding the public that evading the extra stamp duty by getting others to pose as first-time buyers for them is a criminal offence.

However, we do not think this will drag down residential sales or prices significantly, as these deals make up only a very small percentage of transactions.

According to the Transportation and Housing Bureau, primary housing supply is expected to reach 96,000 flats in the coming 3-4 years, the highest since this data became available in 2004.

While on the one hand, abundant supply and interest-rate rises will help suppress price growth; on the other hand, high land prices and strong housing demand will lend support to home prices, which are expected to rise another 5-10% in 2017