In his inaugural Policy Address, Chief Executive Leung Chun-ying gave much detail on medium to long term measures to increase residential supply. From my point of view, the measures will play a key role in the city’s housing supply in the long run.
Reclamation to Increase Supply of Land
After the Planning Department suggested possible sites for reclamations, the Government selects Lung Kwu Tan, North Lantau Island and an artificial Island off Lamma as potential reclaimed sites. It stands to reason that these three sites are picked out from the others. Firstly, the Government is going to build highways to connect Tuen Mun Road and Route 10 to meet Tuen Mun’s traffic demand. With a convenient traffic network, the Lung Kwu Tan site has high hopes of becoming the next new town.
Secondly, North Lantau Island still has much room for the development. The up and coming North Lantau Island Highway and Tung Chung Line will create a strong transportation network which can immediately support developments and residential activities on the reclaimed land.
Thirdly, the site off Lamma Island is in close proximity to the heart of the city and most flexible to various purposes among the three proposed sites. These reclamation projects will provide land not only for housing supply, but also for sizable industrial facilities. It will become one of the most important reclamation projects after the West Kowloon Reclamation Project and Airport Core Programme Project in the 90’s.
As the issues of environmental protection now encounter more resistance than ever, it is more efficient to propose large scale reclamation projects in two or three prospective sites rather than in smaller patches across multiple districts. From a productivity perspective, this could reduce the cost of environmental impact assessment, administration and at the same time minimize the opposing voice from the society. It will certainly be easier to give the green light to two or three massive reclamation projects instead of a dozen of small ones.
Increase Plot Ratio as Short Term Measures
In addition to the medium to long measures to resolve housing problems, the government also proposes the conversion of GIC (Government, Institution or Community) sites for residential use as the short term measure. While it is an effective means to increase residential supply, amendment to land terms should be made accordingly with an aim to increase plot ratio or other purposes and maintain its GIC function. As mentioned earlier, raising the plot ratio of well-developed new towns and building residential units on government-owned agricultural lands are other feasible means to increase housing supply.
Since the short-term measures in the Policy Address are largely as expected, the uncertainty surrounding the market has disappeared. The overall home sale in the first quarter of this year is expected to show strong growth, compared to the previous quarter where BSD and SSD were introduced. Growth in the residential market is expected to continue after the seasonal slowdown during Chinese New year.