Page 70 - LH_Research_Report_2020_Eng

A vi
A vicious cycle is formed as fewer completions lead to a lower demand cious cycle is formed as fewer completions lead to a lower demand
projectionrojection
p

(Figure 41) Vicious cycle of demand projection under current LTHS methodology

1 Low completion rate implies that
there are fewer new houses for
people to move out to

5 Low supply target 2 Average no. of people
results in low
in a flat is pushed up
completion rate artificially

4 Demand forecast and 3 The increase of household
formation is artificially
supply target of housing
drop subsequently suppressed

The current practice of household projection feeds into a vicious cycle of downward revision.

The cycle begins when the low housing completion rate provides few opportunities for people to move out to new houses.
As such, it causes the average number of persons per flat to be artificially pushed up, which in turn artificially suppressed
the household formation figure. Subsequently, both the demand forecast and supply target for housing will be decreased.
Eventually, the low supply target results in fewer completions, and will kick off the next round of cycle again.

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