The Hong Kong Government believes the residential property market is in danger from a price bubble, according to Donald Tsang, the city’s chief executive, and may even release more land to deflate prices.

‘The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in purchasing a home, and the possibility of a property bubble,’ Tsang told the Legislative Council. ‘The Government will closely monitor market changes in the coming months. When necessary, we will fine-tune land supply arrangements with a view to quickening the pace of bringing readily available residential sites to the market.’

Demand for property has surged this year, particularly for luxury units, putting pressure on the government to free up more land, which it tightly controls. The Government has not held any residential land sales for around 18 months. The Government is Hong Kong’s biggest provider of land and has altered supply to support or depress prices.

Tsang also announced policy changes aimed at promoting the redevelopment of old industrial buildings, which have fallen into disuse as companies use cheaper factories in China instead.