Hong Kong developer stocks reversed earlier gains after Chief Executive Carrie Lam’s maiden policy speech didn’t spell out proposals to boost land supply or detail a highly anticipated plan to convert farm land into homes in the world’s least-affordable housing market.
Meeting the public’s housing needs remains the “top priority” for Hong Kong, Lam said in her first speech after taking the city’s top job in July. She said details of a plan to introduce “starter homes” for first-time home buyers will be unveiled in mid-2018.
“It now appears that the land supply for “Starter Homes” will have to come from sites already owned by private developers or to be bought from the government,” Lam said Wednesday.
Shares of New World Development Co., which surged as much as 6.2 percent before Lam’s speech, fell 1.2 percent in Hong Kong. Sun Hung Kai Properties Ltd. fell 0.9 percent after earlier rising as much as 1.5 percent, while the Hang Seng Property Index also declined 0.9 percent.
“The market expected Carrie Lam to say ‘let’s have more cooperation with developers to create more land supply,’” said Raymond Cheng, director of Hong Kong and China property research at CIMB Securities. “Her not mentioning the agricultural land scheme disappointed and that is why shares are down.”
Investors had expected Lam to speed the conversion of farm land for residential developments. Lam vowed in her campaign to tackle the high cost of housing, seen as one of the major sources of unrest in the city of 7.1 million. A University of Hong Kong poll released Oct. 10 found 94 percent of people identified housing as the most important issue for the chief executive to address.
Unlocking idle agricultural land for residential use would be a boon for property developers, who have found the system of approvals unsatisfactory. “It establishes a way…