The latest data pointed out that by the end of June, the relevant supply of 2,000 units less than the end of March, but still reached 105,000 units, is more than 100,000 units for three consecutive quarters. According to the Housing Bureau, with the Government's continuous and orderly increase in housing land supply, it is believed that the potential supply will remain at a high level in the next three to four years.
According to the latest figures from the Housing Bureau, as at the end of June, the latest projected potential supply of first-hand private residential flats in the next three to four years was 105,000 flats, a decrease of 2,000 flats from the end of March this year but exceeding 100,000 flats for three consecutive quarters. Among them, about 17,000 units are completed but still unsold, about 68,000 units are under construction but unsold, and about 19,000 units have been granted land and are ready for construction.
Of the 105,000 units, 90,000 are estimated to be small and medium-sized units with a saleable area of less than 70 square metres (753.48 square feet), accounting for 86 per cent of the overall supply, the same percentage as in the previous quarter. The authorities expect that 17 residential sites will be converted to disposed sites in the coming months, providing about 6,800 flats.
According to the data, the number of residential units completed in Hong Kong in the second quarter of this year was 800, down by 3,200 or 80 per cent year-on-year, and down by 6,000 or 88 per cent quarter-on-quarter. In the first half of this year, the number of residential units completed was 7,600, a year-on-year decrease of 4,500 units or 37%; and in the second quarter of this year, the number of private residential units under construction was 6,000, a year-on-year surge of 5,600 units or 14 times; quarterly increase of 3,700 units or 1.6 times. In the first half of this year, the number of private residential construction units was 8,300, an increase of 4,100 units or 98 per cent year-on-year.
Unity Hong Kong Fund Vice President Yip Man-kee believes that the number of new flats and unsold new flats under construction have remained at a high level in recent years, and it is believed that with the rise in interest rates, so that the interest rates of different investment products and time deposits have become higher, and the attraction of buying flats to collect rents has been reduced, and the demand for investment in the property market may be further reduced, coupled with the banks to raise the mortgage ceiling interest rate, and the pressure of mortgage repayments has increased, which also led to some users to "switch to buy to rent". The increase in mortgage repayment pressure as a result of higher mortgage cap rates by banks has also led some users to "switch from buying to renting. He expects that the market will continue to adopt a wait-and-see attitude, and the potential supply of first-hand private residential flats will remain high in the future.
Mr Yip pointed out that the number of private residential units completed in the second quarter of this year was only 800, a record low since the first quarter of 2015, and also 88 per cent lower than that of the first quarter of this year, suggesting that developers may be making adjustments to the progress of their projects in response to the latest market conditions. Given that the completion volume in the first half of the year is only 38% of the 19,953 units forecast by the Department of Assessments for the whole year, it may be difficult for the completion volume to meet the target this year.
Knight Frank director, head of Greater China research and consulting department Wang Zhaoqi said, the first half of the property market performance is not as expected, although the developers to speed up the launch of new flats for sale, but the number of units of land available for development is still maintained at a high level, so that the overall supply figures remain at a high level. He estimated that this year's residential construction volume will rebound to about 15,000 to 17,000 units, a year-on-year increase of 40 per cent, while the completion volume will remain stable, a total of about 15,000 to 18,000 units for the year.
According to S.K. Wong, the Government's determination to maintain a certain level of land supply in the face of poor property market performance is evident from the fact that most of the recent Crown land auctions were conducted at the lower end of the market price range or even lower, while the medium- and long-term supply of land will depend on the Government's progress in the development of the North Metro Area, which will have to deal with the resumption of brownfield, agricultural and tso tong land. With the current market climate affected by interest rate hikes and a lack of purchasing power, the number of residential property transactions this year is expected to remain at a low level of between 53,000 and 58,000 units.
Market statistics also show that there is a lack of purchasing power in the market. Senior Co-Director of the Research Department of Centaline Property, Yang Mingyi, pointed out earlier that it is expected that less than 40% of the private residential units completed this year will be sold by the second quarter of this year, which is a four-year low. The proportion of first-hand units sold in the second quarter of the same year continues to fall, with 70.5 per cent sold in 2020, 63.4 per cent in 2021, 59.3 per cent in 2022 and only 38.9 per cent in 2023. The proportion of sales has been decreasing year on year, shrinking significantly by 31.6 percentage points over the three-year period. This year, the ratio is even significantly lower, at less than 40 per cent, resulting in a rising backlog of existing flats.
