HONG KONG - Hong Kong said on Tuesday it would allocate three parcels of land by the end of 2024 for private developers to build subsidized housing in an effort to accelerate the supply of more affordable homes in the city.

The financial hub had a similar scheme before 2002, but currently subsidized housing built under its "Home Ownership Scheme" is produced only by the government's Housing Authority and a non-government organisation called Hong Kong Housing Society.

The first two sites, to be sold by tender at a 35% discounted reserve price, are expected to provide a total of 2,300 flats which will be sold to eligible buyers at 65% of the market rate, Secretary for Housing Winnie Ho told a press conference.

Private developers are also encouraged to use their own land to build flats under the scheme by paying a lower fee for switching the land's originally designated use.

Hong Kong has long struggled with sky-high housing prices, which have rocketed by 350% in the past two decades and created one of the widest wealth gaps in the world, making accommodation a social problem that Beijing is keen for the city to tackle.

The city was ranked by survey company Demographia as the least affordable city in the world for a thirteenth consecutive year.

"We aim to tap into market forces to enhance quantity, speed, efficiency and quality of the subsidized sale flats," Ho said.

But industry observers said the government may need to provide more incentives to encourage private developers' participation.

"The government will not buy back any unsold flats from the developers, and it doesn't encourage selling unmodified flats, which will increase the costs for developers," said Martin Wong, Greater China head of research and consultancy at Knight Frank.

He added the small scale of the scheme meant the increased supply would not have any impact on the private market.

(Reporting by Clare Jim; Editing by Mark Potter)