Supply of homes to remain balancing act for Hong Kong government
- As property gloom persists, officials remain mindful that income from land put on the market is essential for city
The amount of land put up for sale by the Hong Kong government is more than a barometer of the current state of the property market. Not only does it reflect whether officials are upbeat about the outlook for homes, but also affects how much money is going into the public coffers as well as housing output in the longer term.
A steady supply of land and income is essential for both the operation of government and development of the city.
Tellingly, only a single parcel of land will be tendered in the current quarter. The 1.9-hectare site on Lantau Island is expected to produce 110 low-density housing units in Cheung Sha. Three other plots will come from the Urban Renewal Authority and the MTR Corporation, with a total output of 2,650 flats, according to the latest land sale programme released by the government.
Together with some 440 units expected from seven private developments involving lease modification, the housing supply in the first three quarters shall reach 10,150 units, close to 80 per cent of the full-year target of 12,800, officials say.
Notwithstanding the relatively good progress in meeting the goal, the outlook for the local property market is anything but bullish. After repeated setbacks in the tendering of other plots, the government finally managed to sell a Kai Tak prime site at HK$5.3 billion last month, a nine-year low for a plot at the former airport.
In July, a Kennedy Town site went for HK$1.72 billion, the lowest on Hong Kong Island since June 2022. The lower-than-expected land revenues are just a fraction of the annual target of HK$85 billion.
Secretary for Development Bernadette Linn Hon-ho has sought to play down the shortfalls, saying revenue targets from land premium will always be subject to market forces. True as that may be, the government must also be mindful of the market response when releasing land to meet supply targets.
Officials have pledged not to sell land cheaply, but the land sale programme cannot lose touch with market sentiments either.
Even though the private property market is not as active as it used to be, the demand for government-subsidised housing remains high. The latest batch of 9,100 units under the Home Ownership Scheme attracted some 170,000 applications.
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With the gloomy outlook likely to prevail for some time, the government has signalled there is some room for adjustment in the wake of growing calls to relax anti-speculation measures introduced a decade ago.
How to ensure a steady supply of land and housing while generating a healthy source of public revenue will continue to put the government to the test.
