Hong Kong chief executive Leung Chun-ying has announced a series of measures on increasing the future supply of private and public housing as well as increasing residential land supply by changing land use.
In an ambitious plan he has pledged to build at least 100,000 public rental housing (PRH) units over the five years starting from 2018. There is a severe shortage of affordable housing in Hong Kong, with many locals priced out of the market.
He also plans to further relax restrictions on wholesale conversion of industrial buildings as this provides financial incentives to landlords, which helps increase commercial and residential land supply shortly, and to put forward land reclamation plans.
Property consultants Knight Frank welcomed the broad outline of the plan for the long term but said that 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.
It predicts that home prices are set to remain stable with upward or downward movements within 5% this year.
Alnwick Chan, executive director at Knight Frank in Hong Kong said that the governments direction for long term housing policy is correct, adding that government departments should be active in processing applications for increasing development density of private residential projects.
He added that the Lands Department should review the procedures for land administration, land disposal and land premium application.
His colleague, Thomas Lam, director and head of research for Greater China at Knight Frank, said that 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.
ґHowever, the new policies involve time consuming collaborations among a number of government departments, meaning these new supply will not come online until 2015 to 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, he explained.
ґHowever, we can see the governments 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,Ғ he added.
The Royal Institution of Chartered Surveyors also welcomed the announcement and said the plan should address the critical shortage of land and housing issues which are affecting the overall competitiveness.
It said it supports the idea of reclamation outside Victoria Harbour as it is an effective way to build up a sustainable land reserve to meet long term demand and future needs of the city. But it said that in the forthcoming stage of public consultation, it is important for the administration to present to the public the vision as well as the overall development plan for North Lantau, Lung Kwu Tan in Tuen Mun, Southwest Tsing Yi and Ma Liu Shui.
The organisation also welcomed a commitment to review subsidised housing policies, including the My Home Purchase Plan (MHPP) and new Home Ownership Scheme (HOS), allowing more efficient use of land to cater for the needs of Hong Kong residents better and improve the living environment.
RICS Hong Kong feels that this policy address is heading towards the right direction in addressing the shortage of commercial and residential space,ђ said Kenneth Kwan, chairman of RICS Hong Kong Board.
With such an ambitious plan, it is important for the various bureaux and departments to be working together to achieve these goals, and thatђs why RICS Hong Kong is in favour of a centralised agency to coordinate these projects, he added.