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Development chief vows to ensure adequate supply to meet market needs

In line with the government's pledge to put 29 residential sites under the hammer in the 2016-17 financial

year, as unveiled in the latest Budget, the land sale program will kick off in the first quarter of the fiscal year with an initial seven sites up for grabs.

The plots - three in Tai Po and one each in Tuen Mun, Sha Tin, Yau Tong and Tsing Yi - are expected to offer a total of 4,800 apartments.

Details of the program were announced on Thursday by Secretary for Development Paul Chan Mo-po, who vowed that land sales will continue to be launched, based on market needs to ensure consistent land supply.

The seven sites are among the 29 to be sold in the coming fiscal year, providing a total of about 19,000 units - the highest number since 2010. Seventeen of the sites are in the New Territories, 10 in Kowloon and two on Hong Kong Island.

Along with projects to be developed by MTR Corporation, the Urban Renewal Authority and private developers, about 29,000 apartments are due to come on stream in the 2016-17 year.

In the 2015-16 fiscal year, about 20,130 residential units were built from various land resources - higher than the private sector's target of supplying 19,000 units in the same period, according to Chan.

"We're not going to guess whether the increased land supply will dent local residential homes prices. We will continue to launch land sales as scheduled to provide a clear message to the homes market that residential and commercial land supply will be consistent," Chan said.

"Residential supply is gradually increasing to meet growing end-user demand and the residential market will be more balanced in the years ahead," said Marcos Chan Kam-ping, head of research for Hong Kong, Macao and Taiwan at CBRE.

"This, combined with further interest-rate hikes and a weaker economic outlook, will prevent property prices from returning to the up-cycle," he said.

Jonas Kan Kwok-yu, head of Hong Kong research at Daiwa Capital Markets, said: "We believe Hong Kong's property sector is undergoing a correction rather than a meltdown."

"Some experienced players appear willing to buy. Over the past few weeks, major transactions have taken place in office, retail and residential property assets. The lump sums involved in these transactions were not small and the realized transaction prices were not depressed," Kan noted.

The government said that with the increase in land supply and expectations of further US interest-rate hikes, Hong Kong's residential homes prices have been falling since October last year, with a cumulative drop of 9 percent as of last month.

"Should property prices see a soft landing and stabilize, the government may consider withdrawing some of its existing cooling measures and reducing its control over the sales market," CBRE's Chan reckoned.

Financial Secretary John Tsang Chun-wah reiterated in a radio phone-in program on Thursday he saw no compelling reason for the cooling measures to be dropped for the time being.

"We have to gauge whether the homes market is exhibiting a declining trend. As a lot of complex factors have to be taken into account, there's no room at present to relax those cooling measures," Tsang said.

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A view of Tai Koo Shing. The government says Hong Kong's residential homes prices have been falling since October last year, with a cumulative drop of 9 percent as of last month. Parker Zheng / China Daily

(HK Edition 02/26/2016 page8)