Former Hong Kong leader Leung Chun-ying has raised concerns about the risks of oversupply in the property market after the government pledged to add more housing units from new large-scale development areas.
“For now, there is a shortage of land and housing supply in Hong Kong, but in the future, more supply is not always better,” Leung, Hong Kong’s chief executive from 2012 to 2017, said in a social media post on Thursday with the headline “preventing oversupply”.
The government has proposed the Northern Metropolis, a HK$224 billion (US$28.7 billion) project that aims to turn 30,000 hectares (74,000 acres) of land into a housing and economic development zone. The scheme, which includes Kwu Tung North and Fanling North, will accommodate 226,700 people and will create about 53,100 new jobs, according to the government.
Leung also questioned whether there would be so much demand in the future. “The huge increase in supply and the sharp fall in property prices is certainly good to solve the housing problem, but how can the resulting negative equity problems, financial problems and government finances be dealt with?” he said in the Facebook post.
Leung said that in the past, when developing new areas, the government made money from land sales. However, as the development density of new development areas gets lower, the income per square foot of land has dropped.
He said demand needs to be estimated, supply planning needs to be quantified, and the government’s financial revenue and expenditure for developing new districts has to be budgeted.
