The repositioned housing policy is beginning to show positive effects with the property market picking up and negative equity cases falling, Secretary for Housing, Planning & Lands Michael Suen says.

Speaking at the Legislative Council Budget Debate today, Mr Suen said statistics show the public and investors have regained confidence in the property market.

On the supply of private residential flats, Mr Suen said it is estimated around 26,000 new units will be completed this year and around 23,000 in 2005. For 2006 and 2007, the estimated supply will be about 16,000 and 7,000 respectively.

However, he emphasised these figures reflect only the production of flats generated from private residential development projects under construction and sold sites, and do not represent the actual supply in each of the coming four years.

Future supply will be affected by the amount of unsold housing stock accumulated from previous years and the new private residential flats which will be built between now and 2007.

"The number of unsold completed flats has been on the decrease since our analysis of the supply of residential flats last July, reflecting an increasing take-up rate and a corresponding improvement in the imbalance between supply and demand of residential flats," Mr Suen said.

"We must take into account the new private residential flats which will be built any time between now and 2007. While I am sure there will be continuous supply, the actual amount of production is ultimately up to the market and the developers, who will decide on the timing and amount of production after careful assessment of the latest market information."

Application List System a market-led mechanism

On the Application List System, Mr Suen said some in the market are concerned the supply of land may be affected by the low success rate in triggering a land sale, and this may lead to disruptions in the supply of residential flats in future.

He said the system is a market-led mechanism in which the market determines flexibly when the sites and how many of them are offered for sale. The upset price for the land sale is also determined according to market price.

This mechanism ensures a continual supply of land to meet market demand and avoids disruption, he said, adding the Application List is not the only source of land supply as developers may change the use of their land for permissible development through lease modification.

Turning to the disposal of Surplus Home Ownership Scheme Flats, Mr Suen said the Government has studied various disposal options in a positive and open manner, in particular the suggestion of transferring HOS flats to staff quarters for the disciplined services.

Discussions with the Government departments concerned have reached the final stage, and the Government intends to transfer another 3,000 flats to public rental housing. The Housing Authority will discuss the proposals in due course.

On the suggestion to sell HOS flats to public housing tenants, although the private property market is becoming stable, the Government will continue to monitor closely the supply and demand of residential flats and avoid impacting the property market which has just begun to revive.