Our Hong Kong Foundation "Hong Kong Housing Landscape Navigator 2025"
Our Hong Kong Foundation "Hong Kong Housing Landscape Navigator 2025"
(24 April 2025, Hong Kong) Our Hong Kong Foundation (OHKF) released its Hong Kong Housing Landscape Navigator 2025 (the report), providing an in-depth analysis of the latest housing supply trends and recurring market themes. Over the next five years, average annual private and public housing completions are expected to reach 17,100 and 37,700 units, respectively, meeting the Long Term Housing Strategy (LTHS) target.
Given the weak land sale market, the Government should continue to streamline approval procedures and simplify conditions in its land grants. Meanwhile, the public housing supply outlook remains positive, and the Composite Waiting Time for Subsidised Rental Housing (CWT) is also expected to reach its target. However, reining in ballooning construction costs poses a new challenge. Regarding subsidised housing, despite an expanding overlap of lump sum prices with private housing, potential competition remains insignificant, and it can play a greater role in facilitating the turnover of public rental housing (PRH) units in the future.
Private Housing Supply: Weak Land Sale Market and Lengthened Development Periods Call for Streamlining Approvals and Simplifying Land Grant Conditions
Average annual completions will be around 17,100 units in 2025-2029. However, completions will be front-loaded with around 20,000 units in 2025 and 2026, then gradually decline to around 15,000 to 16,000 units annually between 2027 and 2029. For the second five-year period in 2030-2034, average annual completions are expected to range from 15,400 to 19,900 units.
There is a noticeable slowdown in every stage of the private housing development cycle, with the land sale market shrouded by conservatism. In 2024, approved pre-sale consent applications, superstructure commencements, and estimated flat yields from private housing land supply continued to decline. Weak market fundamentals, compounded by higher development risk aversion, led to a decline in successful government land tenders, plot sizes, and accommodation values since 2022/23.
An analysis of over 100 government sites tendered between 2011 and 2020 that have completed the development cycle shows that development periods have lengthened by 33% in recent years, and that more than half (57%) of the development period involved the pre- and post-construction phases. Development periods could be significantly lengthened due to site complexities and requirements to construct public facilities. Therefore, the report urged the Government to continue streamlining approval procedures and simplifying conditions in its land grants.
Public Housing Supply: Completions on Target and Shorter Waiting Times Ahead, yet Ballooning Expenditures Need to be Reined In
The report indicates that public housing completions are entering a harvest phase. Its forecasts suggest that traditional public housing completions alone will reach 32,100 units per annum between 2025/26 and 2029/30, exceeding the LTHS target of 30,800 units by 4% – the first time this has happened since the LTHS was promulgated in 2014. Adding up the Light Public Housing (LPH), where its implementation is on track, average annual public housing completions would reach 37,700 units over the next five years.
The previously observed problem of back-loaded supply is easing, and the CWT is expected to show a downward trend. Our analysis indicates that a stronger buffer above the LTHS target is being built up, where even accounting for possible delays, the resulting traditional public housing completions will still exceed the LTHS target by some 7% to 31% in the next decade. Nonetheless, the 30,000 LPH units remain indispensable to plug the short-term supply gap of traditional public rental housing units in meeting the key performance indicator of shortening the CWT to 4.5 years.
Nevertheless, the positive outlook for public housing completions comes with a hefty price tag. The Hong Kong Housing Authority’s annual construction expenditures are forecasted to increase by 73% in the coming four years. Given the supply buffer in the future, the report recommends that authorities rein in ballooning construction expenditures by reconsidering the cost-effectiveness of infill developments and sites with complex terrain.
Subsidised Housing Spotlight: Limited Clientele Overlap and Raison d'être Remains, While Larger Units Can Activate the Chain of Property Transactions
As home prices have trended downward since the high in 2021, the report notes that the overlap in lump sum prices of subsidised and private housing has expanded to HK$1–5 million. However, the analysis shows that only 3% of private housing transactions in 2024 were between HK$1–3 million, indicating that the potential competition with subsidised housing in this price range is insignificant.
Subsidised housing units between HK$3–5 million are susceptible to potential competition between the subsidised and private housing markets, with a corresponding clientele near the median household income level. However, this group comprises only 18% of Hong Kong households. For other low- to middle-income families below this income bracket, subsidised housing remains their first step towards home ownership, underlining its raison d'être.
Historical data shows that subsidised housing has a greater impact on PRH unit recovery and turnover than combating tenancy abuse. Recovered units have become the mainstay of PRH allocation and the reduction of PRH waiting time over the past two years. With over 30% of PRH households open to purchasing subsidised housing, up to 338,100 PRH units can be recovered. However, a significant demand-supply mismatch exists in the secondary market for subsidised housing. The report recommends building larger subsidised housing units to entice upgrading and boost turnover.
OHKF President Dr Jane Lee said: “Hong Kong's housing landscape is currently navigating through turbulent waters. Amidst headwinds such as elevated interest rates, high construction costs, and inventory backlog, moods and narratives are understandably gloomy as conservatism takes hold. However, we should guard against such pessimism from becoming a self-fulfilling prophecy. In particular, given the economic volatility, more forward-looking land and housing strategies are needed for policies to work hand-in-hand with the market to overcome various challenges. Therefore, we will continue to steer the public through these challenges, putting them into perspective by providing fact-based and data-driven analysis.”
OHKF Vice President and Executive Director of Public Policy Institute Mr Ryan Ip remarked: “The noticeable slowdown in every stage of the private housing development cycle foreshadows a gradual decline in upcoming completions. Lengthened development periods and other adverse factors have dampened the land sale market in recent years. In particular, complexities arising from the pre- and post-construction phases have significantly prolonged development periods, tying up funds for notably longer periods than the pure construction timetable. The resulting higher development risks deterred developers’ interest and willingness to submit competitive bids. While the market will self-adjust, the authorities should continue to streamline approval procedures and simplify land grant conditions."
OHKF Head of Land & Housing Mr Jason Leung commented: “Although public housing completions are poised to enter a harvest phase, potential challenges remain. Faced with ballooning construction expenditures in the coming years, the authorities should review the cost-effectiveness of construction programmes. Meanwhile, despite an expanded overlap in the lump sum prices of subsidised and private housing, competition for clientele remains limited. Subsidised housing continues to serve its raison d'être in facilitating home ownership among grassroots families. However, small units have dominated recent subsidised housing completions, which is out of sync with PRH tenants' preferences. We hope unit sizes in upcoming subsidised housing completions can regain an upward trend.”
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Hong Kong Housing Landscape Navigator 2025:
Full Report: https://bit.ly/3GkCz29
PowerPoint Material: https://bit.ly/4iup8Ky
(24 April 2025, Hong Kong) Our Hong Kong Foundation (OHKF) released its Hong Kong Housing Landscape Navigator 2025 (the report), providing an in-depth analysis of the latest housing supply trends and recurring market themes. Over the next five years, average annual private and public housing completions are expected to reach 17,100 and 37,700 units, respectively, meeting the Long Term Housing Strategy (LTHS) target.
Given the weak land sale market, the Government should continue to streamline approval procedures and simplify conditions in its land grants. Meanwhile, the public housing supply outlook remains positive, and the Composite Waiting Time for Subsidised Rental Housing (CWT) is also expected to reach its target. However, reining in ballooning construction costs poses a new challenge. Regarding subsidised housing, despite an expanding overlap of lump sum prices with private housing, potential competition remains insignificant, and it can play a greater role in facilitating the turnover of public rental housing (PRH) units in the future.
Private Housing Supply: Weak Land Sale Market and Lengthened Development Periods Call for Streamlining Approvals and Simplifying Land Grant Conditions
Average annual completions will be around 17,100 units in 2025-2029. However, completions will be front-loaded with around 20,000 units in 2025 and 2026, then gradually decline to around 15,000 to 16,000 units annually between 2027 and 2029. For the second five-year period in 2030-2034, average annual completions are expected to range from 15,400 to 19,900 units.
There is a noticeable slowdown in every stage of the private housing development cycle, with the land sale market shrouded by conservatism. In 2024, approved pre-sale consent applications, superstructure commencements, and estimated flat yields from private housing land supply continued to decline. Weak market fundamentals, compounded by higher development risk aversion, led to a decline in successful government land tenders, plot sizes, and accommodation values since 2022/23.
An analysis of over 100 government sites tendered between 2011 and 2020 that have completed the development cycle shows that development periods have lengthened by 33% in recent years, and that more than half (57%) of the development period involved the pre- and post-construction phases. Development periods could be significantly lengthened due to site complexities and requirements to construct public facilities. Therefore, the report urged the Government to continue streamlining approval procedures and simplifying conditions in its land grants.
Public Housing Supply: Completions on Target and Shorter Waiting Times Ahead, yet Ballooning Expenditures Need to be Reined In
The report indicates that public housing completions are entering a harvest phase. Its forecasts suggest that traditional public housing completions alone will reach 32,100 units per annum between 2025/26 and 2029/30, exceeding the LTHS target of 30,800 units by 4% – the first time this has happened since the LTHS was promulgated in 2014. Adding up the Light Public Housing (LPH), where its implementation is on track, average annual public housing completions would reach 37,700 units over the next five years.
The previously observed problem of back-loaded supply is easing, and the CWT is expected to show a downward trend. Our analysis indicates that a stronger buffer above the LTHS target is being built up, where even accounting for possible delays, the resulting traditional public housing completions will still exceed the LTHS target by some 7% to 31% in the next decade. Nonetheless, the 30,000 LPH units remain indispensable to plug the short-term supply gap of traditional public rental housing units in meeting the key performance indicator of shortening the CWT to 4.5 years.
Nevertheless, the positive outlook for public housing completions comes with a hefty price tag. The Hong Kong Housing Authority’s annual construction expenditures are forecasted to increase by 73% in the coming four years. Given the supply buffer in the future, the report recommends that authorities rein in ballooning construction expenditures by reconsidering the cost-effectiveness of infill developments and sites with complex terrain.
Subsidised Housing Spotlight: Limited Clientele Overlap and Raison d'être Remains, While Larger Units Can Activate the Chain of Property Transactions
As home prices have trended downward since the high in 2021, the report notes that the overlap in lump sum prices of subsidised and private housing has expanded to HK$1–5 million. However, the analysis shows that only 3% of private housing transactions in 2024 were between HK$1–3 million, indicating that the potential competition with subsidised housing in this price range is insignificant.
Subsidised housing units between HK$3–5 million are susceptible to potential competition between the subsidised and private housing markets, with a corresponding clientele near the median household income level. However, this group comprises only 18% of Hong Kong households. For other low- to middle-income families below this income bracket, subsidised housing remains their first step towards home ownership, underlining its raison d'être.
Historical data shows that subsidised housing has a greater impact on PRH unit recovery and turnover than combating tenancy abuse. Recovered units have become the mainstay of PRH allocation and the reduction of PRH waiting time over the past two years. With over 30% of PRH households open to purchasing subsidised housing, up to 338,100 PRH units can be recovered. However, a significant demand-supply mismatch exists in the secondary market for subsidised housing. The report recommends building larger subsidised housing units to entice upgrading and boost turnover.
OHKF President Dr Jane Lee said: “Hong Kong's housing landscape is currently navigating through turbulent waters. Amidst headwinds such as elevated interest rates, high construction costs, and inventory backlog, moods and narratives are understandably gloomy as conservatism takes hold. However, we should guard against such pessimism from becoming a self-fulfilling prophecy. In particular, given the economic volatility, more forward-looking land and housing strategies are needed for policies to work hand-in-hand with the market to overcome various challenges. Therefore, we will continue to steer the public through these challenges, putting them into perspective by providing fact-based and data-driven analysis.”
OHKF Vice President and Executive Director of Public Policy Institute Mr Ryan Ip remarked: “The noticeable slowdown in every stage of the private housing development cycle foreshadows a gradual decline in upcoming completions. Lengthened development periods and other adverse factors have dampened the land sale market in recent years. In particular, complexities arising from the pre- and post-construction phases have significantly prolonged development periods, tying up funds for notably longer periods than the pure construction timetable. The resulting higher development risks deterred developers’ interest and willingness to submit competitive bids. While the market will self-adjust, the authorities should continue to streamline approval procedures and simplify land grant conditions."
OHKF Head of Land & Housing Mr Jason Leung commented: “Although public housing completions are poised to enter a harvest phase, potential challenges remain. Faced with ballooning construction expenditures in the coming years, the authorities should review the cost-effectiveness of construction programmes. Meanwhile, despite an expanded overlap in the lump sum prices of subsidised and private housing, competition for clientele remains limited. Subsidised housing continues to serve its raison d'être in facilitating home ownership among grassroots families. However, small units have dominated recent subsidised housing completions, which is out of sync with PRH tenants' preferences. We hope unit sizes in upcoming subsidised housing completions can regain an upward trend.”
-
Hong Kong Housing Landscape Navigator 2025:
Full Report: https://bit.ly/3GkCz29
PowerPoint Material: https://bit.ly/4iup8Ky
