Residential Land

122.    For public housing, based on the latest projection, Government has adopted the public housing supply target of 280 000 units for the ten-year period from 2016-17 to 2025-26.

123.    The Hong Kong Housing Authority (HKHA) requires substantial resources to implement the ten-year public housing construction programme.  It is estimated that HKHA's cash and investment balance will drop to $16 billion by the end of March 2020.  I have set aside the investment returns of $45 billion in 2015 as an injection into the Housing Reserve.  Taking this injection together with the 2014 allocation and accumulated investment returns, the balance of the Housing Reserve now stands at $74 billion.  When Government and HKHA have reached consensus on the necessary government financial support arrangements, we shall seek approval from the Finance Committee for funding to be drawn from the Housing Reserve to support the long-term public housing development.

124.    As for private housing, Government estimates that private housing land supply in 2015-16 has a capacity to produce over 20 000 units.  The 2016-17 Land Sale Programme comprises 29 residential sites, including 14 new sites, capable of providing about 19 000 units.  Taking into account railway property development projects, the Urban Renewal Authority's projects and private redevelopment and development projects, we estimate that the potential land supply for private housing in 2016-17 will have a capacity to produce 29 000 units.  The Secretary for Development will announce tomorrow the Land Sale Programme for the next financial year.

125.    Amid the increase in land supply over the recent past and the market expectation of US interest rate hikes, the property market has shown signs of correction since the middle of last year.  Trading in the residential property market has turned quieter, and property prices have been falling for four consecutive months since last October, with a cumulative drop of nine per cent as at January 2016.  There will be successive rises in interest rates, and the medium-term supply of local residential flats will increase.  All these factors, coupled with various uncertainties overshadowing the economic outlook, could add pressure to further property market correction.  The public should carefully assess the potential risks, in particular the impact of interest rate hikes on their home mortgages, and their own financial position when making a home purchase decision.