New home constructions grind to a halt again

Himo Liu

The number of new homes started by developers in Hong Kong fell to zero once again in October amid a depressed property market, latest data shows.

It was the third month of zero private housing starts - a term used to described the start of construction on a new residential home - for the year and only the 10th since 2002.

The sole residential project to commence work in October belonged to the Hong Kong Housing Society, the Buildings Department's report revealed

The nongovernmental organization kicked off work on 962 subsidized flats at its dedicated rehousing estate in Hung Shui Kiu/Ha Tsuen.

Revised Buildings Department numbers also showed 8,691 housing starts for the first 10 months of the year, reflecting a 7.8 percent increase from the same period last year when construction began on 8,060 homes.

However, it was still the third-lowest number for the period in nearly a decade.

Ricacorp Properties head of research Derek Chan Hoi-chiu said the declines reflected the challenges developers face in sales amid a sluggish market and higher interest rates.

Meanwhile, private home completions also fell by 44 percent amid the deceleration in construction to 10,570 in the 10 months, an eight-year low for the same period, according to Chan.

This represents only around 53 percent of the Rating and Valuation Department's estimated annual forecast of 19,950 private residential homes for 2023.

Chan expects that around 15,000 private homes will be completed this year, which will be well short of the government's forecast.

A total of two private projects with 480 homes were completed across Hong Kong in October, nearly 80 percent lower than September's 2,309 homes.

The two developments include Henderson Land's Bake Circle Dover in Hung Hom with 324 flats and Lai Sun Development's Bal Residence in Ngau Tau Kok with 156 homes.

Chan believes there is still a chance for some large projects to receive occupation permits by the end of the year.

These include Sun Hung Kai Properties's Novo Land Phase 2A and Phase 2B in Tuen Mun with 929 and 729 flats respectively, Road King Infrastructure's Mori in Tuen Mun with 698 flats, and Minmetals Land's Montego Bay in Yau Tong with 688 flats.

With market expectations of US interest rate cuts next year and the gradual effectiveness of talent schemes, it is anticipated that the property market may experience a "mini-spring" after the Lunar New Year.

And as developers clear their inventories, there is a possibility that the pace of construction and new projects will pick up next year, according to Chan.

himo.liu@singtaonewscorp.com