Chief Executive Leung Chun-ying has announced a series of measures concerning the government’s planning on housing and land in his first Policy Address, involving increasing the future supply of private and public housing as well as increasing residential land supply by changing land use. Knight Frank believes the Policy Address has set a right direction for long-term housing policy, but residential supply is still expected to lag behind demand in the near future. The local residential market is expected to experience only limited impact in the short term. Home prices are set to remain stable with upward or downward movements within 5% this year.
Alnwick Chan, Executive Director at Knight Frank, says “the government’s direction for long-term housing policy is correct. The relaxation or removal of the moratorium (an administrative measure) currently in force to restrict the sale of new land or modification to lease in Pokfulam and Mid-Levels, for example the site of Ebenezer School & Home for the Visually Impaired in Pokfulam, could help increase land supply.”
In order to accelerate land supply, Alnwick agrees that government departments should be active in processing applications for increasing development density of private residential projects. The Lands Department should review the procedures for land administration, land disposal and land premium application. Concerning the preservation of cultural relics, Alnwick believes that the government should be bold and determined to strive for balance during decision making.
Thomas Lam, Director and Head of Research, Greater China at Knight Frank, concludes “the demand for private housing units in Hong Kong reaches around 20,000 units per year, which is in line with the supply target set in the Policy Address. However, the new policies involve time-consuming collaborations among a number of government departments, meaning these new supply will not come online until 2015-2016 the earliest. Therefore, in the short term, demand will continue to outstrip supply and market expectation for home price development is unlikely to change. However, we can see the government’s determination to regulate the demand-supply imbalance in the market. The government may introduce further tightening measures should home prices surge again. We therefore expect home price movements to be limited to 5% this year.”