HONG KONG: The construction volume of residential housing in Hong Kong plummeted last year by 38 percent - the biggest decline in eight years - as fewer people could afford new homes.

The total number of units was 8,000, according to statistics from the Transport and Housing Bureau.

By comparison, the SARS outbreak in 2003 and 2004 saw private-residential construction drop as low as 14,000 units, whereas a boom in 1998 saw construction swell to more than 35,300 units.

But the territory fell hard into recession in the third quarter of last year as exports and consumption weakened. Failing companies emerged from the catering and export sectors, and financial institutions cut jobs, forcing many potential home buyers to abandon or postpone their purchase plans.

And it didn't help that Hong Kong's unemployment rate rose last November to the highest point in more than a year.

In the private housing market, there are 54,000 new apartments waiting for owners. Of which, 44,000 flats are still under construction and 10,000 units are ready to be sold, the Bureau said in a statement yesterday.

Government officials and economists don't expect the housing market - a pillar of Hong Kong's economy - to recover any time soon.

"We have a long and difficult road ahead of us in terms of economic recovery," Chief Executive Donald Tsang said at a press conference this week.

Hong Kong's economy will continue to grow slowly for at least a year, economists at Hang Seng Bank said in a report.

Separately, consulting firm CLSA Asia-Pacific said Hong Kong's prime office rents, the world's third-highest, may drop almost 60 percent by the end of next year as banks fire more workers to cut costs.

Prime office rents in Central and Admiralty fell 14 percent in the fourth quarter from the previous three months, property agency DTZ said last week.

Rents in Central will fall 38 percent this year and 33 percent in 2010, the firm said.

(HK Edition 01/24/2009 page2)