Tale of two cities’ housing markets

The contrast between Hong Kong and Shenzhen could not be starker than in their respective plans for subsidized, or social, housing. While Shenzhen is targeting a surge over the coming two years, putting as many as 300,000 units on the market, Hong Kong has announced it will likely be able to build no more than 13,400 units in the current year, well down from its initial target of just 18,000 for the fiscal period ending in March.

Shenzhen plans to sell 600,000 new homes between now and 2022, of which rental units will be no less than 300,000, it was announced this week. This is part of the city’s bigger urban development plan, unveiled in August last year, which will see 1.7 million new houses built by 2035, with more than 1 million being subsidized.

In October alone, 13 projects were launched, accounting for 100,000 new units, at prices ranging from 20,000 to 50,000 yuan per sqm, around 50%-60% of the respective market price in various districts, Xinhua News Agency reported.

Moreover, the city will soon roll out regulations regarding the public rental houses developed from mixed-use developments (commercial) and urban villages, said the city’s housing authority, as quoted by Southern Metropolis Daily.

In Hong Kong, meanwhile, just 9,820 homes have been provided by the government and private developers in the nine months ended December 31, with another 2,030 units to go in the next three months, which will lead to a total annual supply of 11,850, said Michael Wong Wai-lun, Hong Kong’s Secretary for Development. 

The supply is 10% short of the original target of 13,500 set for the year to March 31, 2020. Ryan Ip, head of the land and housing research at think tank Our Hong Kong Foundation, said the target has already been cut down from the previous target of 18,000 units, as quoted by SCMP.

The outlook for Hong Kong is deteriorating, said Ip, adding that construction starts, pre-sale consent applications and completions almost halved in 2019. “The housing crisis will worsen in the next few years,” he said.

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