The industry worries supply gap because the construction slows down.
(By Ngan LunLok)
According to the data of the second quarter of this year announced by Transport and Housing Bureau yesterday, the construction quantity slowed down, and the private property construction quantity in the second quarter was only 1,700 units, down 26% on a quarterly basis, and it was the new low in 7 quarters (nearly two years), while there was only 4,000 units in the first half of this year, down 73% by year, also it is the new low in ten years since 2009. New property supply up to the peak and construction slowing down make the market to worry about supply gap in future. The industry believes, the data reflects the new property supply has arrived to the peak.
The Transport and Housing Bureau announced yesterday that 93,000 new flats will be supplied in the next three to four years, with the number has not changed for five consecutive quarters. A spokesman adds, 73,700 among the 93,000 units are small and medium-sized units in usable area of less than 753 sq ft, accounting for 79% of the total supply, with the ratio remains unchanged on a quarterly basis, and it is expected that six residential plots will be ready for construction in the coming months, providing about 5,600 units.
The Chief Analyst of Midland, Lau KaFai points out that, with the government's announcement at the end of last year that the proportion of public and private housing was adjusted from 6:4 to 7:3 in the next 10 years, the supply of private housing land has decreased from 18,000 units to 13,500 units in this year, a 25% decrease.
Meanwhile, the planned potential available land supply this year is only 15,500 units, sharply down 40% than about 25,500 units in last year. In this case, unless the pace of land sale and land premium is accelerated in the future, or it is believed that the new property supply quantity will not easy to rise and will up to the peak in short term.
The finished house number in last quarter is 4,800 units.
What worries the market is the falling of both construction and completion quantities, with the falling of construction quantity is the most, and 1,700 units in the second quarter were recorded, down about 26.1% quarterly, also it reaches a new low in the last seven quarters. There only had 4,000 units in the first half of this year, down 73% annually, a new 10-year low. It can be seen that in the next few years, supply will decline and have gap. In terms of completion quantity, there were 4,800 units in the second quarter, and it is 1000 units less than 5,800 units in the first half year, down 6% annually.
In fact, in the past four quarters, the construction quantity is in low level between 1,700 units and 2,300 units per quarter, and the total construction quantity of that four quarters in the past one year was only 7,800 units. In the past, construction quantity had been in low for several consecutive quarters. For example, from the fourth quarter of 2008 to the third quarter of 2009, there were only 7,200 units in the four quarters. Since land site of ready for construction is up to level suitable for 30 thousand units, so it is believed the construction quantity will rise with the building of these projects start in succession.
It is worth noting that, although the new property supply is seem to be stable in the future, but the constitute parts change, such as the unsold units under construction or namely unsold presale units was sharply decreased from 62,000 units in the first quarter to 53,000 units in the second quarter, down by about 14.5%, and it is believed related to the acceleration of presale in the period. As a matter of fact, by the end of June, the sold presale units under construction had been up to 17,000 units, an obviously increase than the 13,000 units announced last quarter.
Potential supply remains in bottleneck.
At the same time, the units ready for construction rose to 30,000 units in the second quarter from 22,000 units in the first quarter, up about 36.4%, and it is estimated that this is related to large land premium projects turning into ready land sit in the earlier, since they were obviously contrary to each other. As for the number of unsold finished units has increased by 1,000 units to 10,000 units per quarter, a new high over 10 years.
The Managing General Director of Q-Fang Hong Kong, Chen KwanHing expresses, the unsold finished units has increased to 10,000 units, while the number of unsold units under buildings has largely dropped to 53,000 units, reflecting that the potential supply of the market is still at a "bottleneck" and the long-term disparities between supply and demand in property market will still tense.
This company synthesizing the monthly reports of Buildings Department and the data from Sales of First-hand Residential Properties Electronic Platform to analyzed that, about 3,821 units among the current finished unsold properties of about 10,000 units are for long term renting or self-use by the developer, accounting for 39% of the total; 778 units are new properties had acquired occupation certificate but not to be launched, while the stock ready flats are about 5,199 units.
