In the next three to four years, as many as 109,000 new flats are expected to flood Hong Kong, according to the housing bureau.

“Given the current market inventory exceeding 22,000 new units, developers have adopted a strategy of prioritising sales volume over pricing, to sell the properties actively in the market, in order to maintain a balance between market supply and absorption,” said Sammy Po Siu-ming, CEO of Midland Realty’s residential division for Hong Kong and Macau.

The supply glut is one factor keeping home prices in check. The other is high interest rates, which remain at a 23-year high, as the city’s monetary authorities stay in lockstep with Federal Reserve policy to maintain the local currency’s peg to the US dollar.

Recent launches have been priced lower than comparable flats nearly a decade ago.

In May, the average price of a new class A unit, defined as a flat of less than 431 sq ft, in Yau Ma Tei was HK$20,346 (US$2,611) per square foot, a 10.6 per cent decrease from HK$22,768 in 2015, according to a study by JLL. Meanwhile, in Kennedy Town, average per-square-foot prices are down 6 per cent to HK$22,022 from HK$23,424 in 2015.

Henderson Land, one of the city’s largest developers, is set to introduce five new residential projects, including Parkwood in Tai Po, No 8 Nam Kok Road in Kowloon City and three joint-venture projects in the Kai Tak area. These projects will offer more than 4,000 units of various sizes, according to a spokeswoman.

So far, the developer has sold about 1,500 units this year, generating almost HK$11 billion in revenue.

“Henderson Land always upholds a strategic approach when launching residential projects, taking into consideration a basket of factors including the market needs, interest rates and economic development,” the spokeswoman said.

Meanwhile, Sun Hung Kai Properties, the city’s largest developer in terms of market capitalisation, said it has sold 1,300 units so far this year, with a total value of HK$17 billion. These flats mainly came from projects such as Yoho West in Tin Shui Wai, Yoho Hub Phase II in Yuen Long, Novo Land in Tuen Mun, Cullinan Harbour at Kai Tak and renovated units at Dynasty Court in Mid-Levels, Central.

Midland’s Po said that with the Fed widely expected to cut interest rates in September, potential buyers could finally be convinced to make their purchases.

“Many potential buyers on the sidelines will look forward to a rebound in property prices, which will also stimulate their desire to buy properties,” Po said. “As a result, property developers are expected to continue launching new developments to cater to market demand.”

Hong Kong’s home sales declined for the third straight month in July, dropping by 3.4 per cent compared with June, following month-on-month declines of 35.14 per cent and 30.47 per cent in May and June, respectively, according to official data.

Home sales rose 67.2 per cent in March and 115.3 per cent in April following the late February removal of decade-old property curbs including a Buyer’s Stamp Duty aimed at non-permanent residents, a New Residential Stamp Duty for second-time purchasers and a special stamp duty for owners flipping their property within two years.

The Hong Kong Monetary Authority followed with its own easing measures, making homes valued at less than HK$30 million eligible for 70 per cent mortgage financing, compared with the previous cap of 60 per cent for flats valued between HK$15 million and HK$30 million.

“Some developers hold a large number of new projects and unfinished units,” said Derek Chan, head of research at Ricacorp Properties. “To remain liquid, some developers do not mind adopting a low-price sales strategy, hoping to achieve the effect of small profits but quick turnover.”

For developers with large inventories, Chan said they might opt to wait for the US interest rate review in September before making decisions about launches.

“If interest rates are indeed lowered, I believe the sales will be faster,” he said. “As for small single-building projects, they are less affected by interest rates, and developers are expected to wait for opportunities to launch sales at any time.”