22 December 2014 - The Government announced last week its intention to raise the 10-year housing supply target to 480,000 units, with critics suggesting that the number is not high enough yet difficult to achieve.
In the coming decade, the target includes 200,000 public rental housing units, 90,000 subsidized sale flats, and 190,000 private housing units with the expectation of 74,000 first-hand private housing units to be launched in the coming 3 to 4 years. Existing land sites are not sufficient to achieve the set goal, with Secretary for Transport & Housing Professor Anthony Cheung noting that the government will have to continue introducing land supply through various strategies, involving land-use review and re-zoning, increasing development intensity and reclamation on an appropriate scale. He admitted this would be difficult due to environmental concerns and the impact on local communities.
The government has secured land sites for 254,000 public flats so far but not all of them have planning permission. "It is quite likely the new target won't be reached. Even Secretary for Development Paul Chan Mo-po has commented that land supply would not be able to meet the previous target of 470,000 flats", said Professor Raymond So Wai-man from the Housing Authority. On the contrary, Andy Kwan Cheuk Chiu, Director of the ACE Centre for Business and Economic Research, believed that it would not be difficult to find enough land to meet the target if the government’s political intention is true.
Chief Executive CY Leung pointed out that while cooling measures have suppressed speculation, the most straightforward solution now for a property shortage is to increase supply. He also issued a reminder that the main reason for surging property prices in recent years was due to the long-term low interest rate environment. When the environment changes, property prices may fall as well.