HK maintains housing supply target

HONG KONG: Hong Kong is confident of meeting its target of providing enough land to supply 20,000 housing units per year in 2011 and 2012, despite recent signs of softening in the property market amid an increasingly uncertain global economic outlook.

Carrie Lam, Hong Kong's secretary for development, said the government would release seven new plots of land in the fourth quarter through tenders as part of ongoing efforts to increase land supply to moderate the city's frothy property market.

Lam said she was "very confident" that despite recent economic uncertainties, about 20,000 new residential units would still be built this year and in 2012, in line with a target announced by Hong Kong Chief Executive Donald Tsang last October.

"In order to stabilise our real estate market and ensure healthy development, continuing to provide adequate land supply is a focus of government policy," said Lam.

Whilst Hong Kong remains one of the world's most expensive places to buy property, recent economic uncertainty has weighed on the market, with the blue chip Hang Seng Index down about 13 percent so far this quarter.

A government land auction of a residential site last week fetched just HK$3.12 billion ($400.4 million), far below market expectations, as cautious developers stayed on the sidelines.

Hong Kong, which relies heavily on land sale for its fiscal income, has seen home prices rise more than 12 percent this year, surpassing records in 1997 amid a low interest-rate environment and buying by affluent mainland Chinese investors.

Lam stressed that Hong Kong was not pursuing a high land price policy amid strenuous attempts by the authorities to bring heated property prices under control.

Flat transactions have slowed since June when the government tightened mortgage conditions while bolstering land supply.

Copyright Reuters, 2011