The HK government announced its "Long Term Housing Strategy" document yesterday. One of the key changes is that the long-term housing supply target has been lifted from 470,000 to 480,000 units over the next ten years.
Looking at composition of this figure, Barclays Research finds that the demographic driver of household formation has actually been revised down by 4% from 294,000 to 282,800.
Similarly, the required units for redevelopment were also cut by 16% from 46,300 units to 39,100 units, while the adjustment for vacancy figure was revised down by 9% from 20,300 to 18,450 units.
The main uplift was for those inadequately housed families (i.e. those living in sub-divided flats), which was raised from 74,900 to 105,600 units.
Overall, Barclays believes the announcement reiterates the government's commitment towards increasing long-term housing supply. It reiterated its view that, all else being equal, an increase in supply against static demand should result in lower prices. But the research house remains cautious on the outlook for the HK property market.
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