According to JLL’s Hong Kong Residential Market Monitor Report, every stage in the residential development lifecycle shows signs of slowdown. JLL forecasts annual private housing completion to fall by 44% between 2026-2028 compared with 2023-2025.
Figures provided by the government reveal a marked decline in domestic unit construction starting, from 21,495 units in 2020 to 12,254 in 2022 – an overall reduction from 21 495 in 2020 and 16 705 completions from 2014-2018 combined. Upon comparison between 2019-2023 with 2014-2018 (14-2018), 13,705 less units have begun construction than were completed within five years, suggesting less completions and completions over time.
JLL data shows that gross floor area (GFA) approved in the first nine months of 2023 for new residential building plans was only 55% of what was approved in 2022 and only 49% of what it averaged between 2019-2022. As projects with building plan approval generally start construction within one or two years of receiving their permit approvals, this may imply fewer units launching construction at once.
Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL in Hong Kong said, “Due to reduced government land sales contributions, only 1,775 private residential units are projected from government land sales in the first three quarters of fiscal year 2023/2024; this number represents less than one quarter of what was typically produced during previous decades.
Redeveloping old districts is another source of new housing supply in urban districts, accounting for more than half of estimated units from private housing supply in 2022/23. But recently there has been a decrease in compulsory sale applications – from an average of 29 per year over three years prior, 22 were filed in 2022 compared to only four filed with the Land Tribunal since September 2023, suggesting a gradual moderation trend.
Cathie Chung, Senior Director of Research at JLL in Hong Kong commented, “The sustained decrease in homebuyer interest compounded with financing pressure for developers under high interest rate environments has had a devastating impact on property development. This slowdown can be observed at every step of residential development from land sales through to construction start. Given this gloomy forecast for home price appreciation, more demand-side supportive measures may be required in order to restore supply mechanisms.”