〈Asian Post, April 29, 2017〉A record 96,000 flats will be added to Hong Kong's supply of private housing over the next three to four years, according to the Transport and Housing Bureau's latest quarterly data, an increase of just 2 per cent from the previous quarter.

The modest gain, which reflects the Hong Kong government's determination to quicken land sales to bolster flat supply, would do little to reverse the surge in home prices that had made the city the world's most expensive urban centre, analysts said.

Hong Kong's home price index, which tracks prices in the secondary market, jumped for the 12th consecutive month in March, advancing 2.2 per cent to a record 319.8, according to data provided by the Rating & Valuation Department.

"Home prices are unlikely to see a significant drop, unless there are unexpected external factors that adversely affect Hong Kong's economy," said Thomas Lam Ho-man, senior director at property consultancy Knight Frank.

"Prices will be supported by strong demand from end users but the pace of growth may slow." The price surge and additional supply underscore the challenges facing incoming chief executive Carrie Lam Cheng Yuet-ngor in addressing what has been labelled as the biggest public concern among the electorate.

In the last 12 months, median home prices in Hong Kong have surged beyond the affordability of many new wage earners and school leavers, while the average size of newly launched units has dwindled.

The average size of newly built flats had shrunk 40 per cent to 600 sq ft in 2016, from 1,000 sq ft in 2013, according to data from the Building Authority.

"Developers are building smaller flats, because these sizes are more affordable" to new buyers, said JLL's regional director of valuation Cliff Tse Wai-hung.

Still, the enthusiasm among buyers continued unabated, undeterred by soaring prices or news of upcoming supply, as hundreds queued yesterday to bid for 96 flats at Chinachem's Parc Inverness luxury apartments in Kowloon Tong. Prices range between HK$18,000 and HK$31,000 per sq ft following a 7.1 per cent discount.

〈China Daily, April 29, 2017〉Mainland developers buying land in Hong Kong at high prices is incomprehensible, Hang Lung Properties chairman Ronnie Chan Chi-chung said yesterday. The high prices of the sites would make it difficult to make a profit from projects to be built on them, he said.

The way mainland developers assess risks, profit returns and direction of Hong Kong's home market is different from locals.

"There is no direct correlation between land and home prices. Land prices can go up, while home prices go down," he said.

He said land supply and demand depend on developers' views, and some players may not necessarily be rational at times. Home prices depend on actual supply and demand in the market, Chan added.

He said it is good to see the participation of many mainland developers in Hong Kong's open market, which is one of the key factors of the SAR's success.

Chan said many overseas developers have tried to invest here, but not many have achieved success. It remains to be seen whether mainland developers will become successful.

He said Hang Lung's land bank in Hong Kong is dwindling, prompting the group to bid for sites in China. The ratio of commercial projects in the company's portfolio will go up, he added. In the long term, commercial property projects in the mainland will be sound investments as the consumption sector becomes increasingly important in the country's economy.

Chan said Hang Lung plans to do more commercial projects in mainland cities which have populations of five to six million.

He assured shareholders during Hang Lung's annual general meeting yesterday that as more and more commercial projects come on stream in the mainland, this will address their concerns on dividend

〈Asian Post, April 27, 2017〉A Citibank survey shows 77 percent of Hongkongers think now is not the time to buy property, a record high since the survey began in 2010, while only 3 percent of the respondents thought it is the time for purchasing.

Although the government raised the stamp duty last November, and implemented other cooling measures, 62 percent of the respondents expected local home prices will go up in the coming 12 months, also a record high.

In contrast, only 9 percent of Hongkongers expected home prices to fall in the coming 12 months, a continuous drop over the past four quarters.

The survey also found that 48 percent of the respondents are not interested in buying a property, versus 23 percent very interested.

Lawrence Lam Chi-kong, Citibank managing director, suggested the public should first conduct a property valuation before purchasing property, as well as do a stress test before applying for a mortgage, as the market is expecting an interest-rate rise.

Meanwhile, Nomura Group expects home prices to grow 8 percent this year compared to the previous year. One of the main factors is the aggressive bidding for sites by mainland developers in Hong Kong.

In the primary market, a pre-sale consent has been issued for Cheung Kong's (1113) Tsuen Wan West project, Ocean Pride. It will provide a total of 960 flats.

Sizes range from 370 to 393 sq-ft one-bedroom homes, 497 to 519 sq-ft two-bedroom, 734 to 799 sq-ft three- bedroom flats, and 1,133 to 1149 sq-ft four-bedroom homes. Nearly 46 percent of the units will be three- bedroom homes, followed by 34 percent of two-bedroom flats.

〈China Daily, April 27, 2017〉By almost every measure, the government’s efforts to rein in Hong Kong’s runaway property market have failed to yield tangible results. Perhaps, a thorough review of its housing policy, focusing on increasing land supply, is in order. Critics argue that finding land in this densely populated city to build adequate housing to meet the ever surging demand is simply not a realistic solution to the problem, which has been compounded by persistent low borrowing rates and the incessant inflow of offishore capital into the local housing sector.

This has prodded more economists and industry experts to urge the government to stay aloof from the market as much as possible while concentrating on building subsidized homes for sale or rent to those at different income levels.

Doing it would mean that a much larger portion of newly created development land has to be used for public housing instead of selling it to private developers. Such a policy would, undoubtedly, lead to a sharp fall in revenue from land sales, along with a substantial rise in expenditure.

But, public housing development is a non-recurrent expenditure that won’t exert a long-term strain on the budget. Temporary budget shortfalls can be easily be covered by the huge fiscal reserves that are earning meager returns.

As with any large-scale construction project, building a public housing estate can run into problems arising from budget overruns and delays. But, these are small risks to take compared to the enormous benefits that a bigger supply of subsidized homes can bring to the public.

A clear timetable of future increases in public housing supply can ease the anxiety of prospective homebuyers who have been misled by sensational reports in the gullible mass media into believing that property prices can only go up and, if they don’t buy now, they’ll never be able to afford it later. Such public obsession has fueled the scramble that, in turn, has pushed homes prices to unrealistic levels.

〈The Standard, March 27, 2017〉Hong Kong is set to overtake New York City to become the most popular property market for mainland Chinese investors. Outbound investment from mainland China in Hong Kong real estate hit an all-time high in Q1 2017, with total transaction volume surging 213 per cent year on year to HK$36.1 billion (S$6.48 billion), according to a report released on Wednesday by global real estate services company Colliers International Group.

The total transaction volume of outbound investment from mainland China to New York City - the top recipient of such investments in 2016 - in the same period was less than half at HK$17.2 billion, a 22.8 per cent year-on-year increase.

This puts Hong Kong in prime position to become the most popular destination for mainland Chinese property investments ahead of New York City this year, said Colliers deputy managing director of capital markets and investment services, Antonio Wu. "I think for Hong Kong (mainland Chinese investors) are mostly focusing in development sites, but in the US they would rather buy hotels, office buildings," Mr Wu told The Business Times.

The jump in transaction volume in Hong Kong could thus be indicative of a growing appetite for development sites, he added. This would mark a change in the strategies of mainland Chinese investors, who have in the last five years mainly targeted trophy assets - such as the Mass Mutual building bought for HK$12.5 billion in 2015 - and en bloc office sales, according to research by Colliers.

The top seven en bloc trades accounted for 82 per cent of the total transaction volume in Hong Kong between January 2012 and March 2017, said Colliers director of research Daniel Shih. Mainland Chinese developers have so far won prominent sites through government land sales, but are expected to look beyond the urban core as most of the new development areas will be in the New Territories.

The growing presence of mainland Chinese developers has stiffened competition for local Hong Kong developers in the fight for land. Local developers may thus want to consider changes to their business models such as converting farmland into residential land to maintain higher profit margins, said Mr Shih. Smaller local developers could also be better off focusing on areas outside the urban core to improve chances of winning public tenders, as well as forming consortia with medium-sized mainland Chinese developers to offer local market expertise in exchange for mainland China market penetration, he added.