Page 13 - Demo

Supply outlook shows extended and continuous declineThe private housing supply outlook is nothing but dim in the foreseeable future. The expected completion of 15,000 units per annum for the next five years, i.e. 2021–2025, is somewhat flattish from the previous level of 15,400 units per year on average recorded in 2013–2020. In earlier cycles, such as 1990–2006 and 2007–2012, an average of 26,000 and 9,900 units per year were recorded. This year, completion forecast of five years further along the horizon has been introduced. Completions of 10 years into the future are now forecast. As the longer-term forecasts are more unpredictable than the shorter-term forecasts, three scenarios were made to assess the situation. In Scenario 1, an average of 12,000 units per year is expected to be completed in 2026–2030. Under the alternative Scenario 2 and Scenario 3, an average of 13,300 and 11,200 units per year, respectively, is expected to be completed in 2026–2030. (For details of the forecast methodology, please refer to Figure 7)In 2018, the Hong Kong Special Administrative Region Government (the Government) revised the public/private split in the housing supply target of the Long Term Housing Strategy (LTHS) from 60:40 to 70:30. With this ratio adjustment, the average annual private residential supply target has been reduced from 18,000 to 13,500 units, and subsequently to 12,900 units. While we welcome the Government’s policy of shifting the public-private mix from 60:40 to 70:30, we believe it would be more advantageous if the total housing supply target is raised at the same time. Otherwise, this revision is just a zero-sum game, or “robbing Peter to pay Paul”. Therefore, we believe it would be appropriate to return the target for private housing completions to the number used prior to the 2018 adjustment, i.e. 18,000 units.