A policy think tank is predicting a significant improvement in housing supply over the next five years.

In its annual report released on Thursday, the Our Hong Kong Foundation said the average wait for public housing, which currently stands at 5.5 years, will be cut to 4.6 years by 2026, thanks to the light public housing scheme which uses modulated housing.

Jason Leung, a researcher at the think tank, said this scheme will be a quick fix for Hong Kong's housing woes.

"Light public housing is a way to use money to exchange for time. Based on the government report in 2021, we see that almost half of those people living in the sub-divided flats are actually waiting for public housing, so therefore the value of light public housing is to provide a quicker solution for these people to get onto public housing and improve their living conditions as soon as possible," he said.

But Ryan Ip, the group's vice president and head of research, said a shortage of construction workers remains a cause for concern.

"In the next few years, we are having a wave of infrastructure projects... so there will be a strong demand for construction workers. On the other hand, we are experiencing an ageing of construction workers in Hong Kong, that's why we believe we have to explore measures to deal with this situation," he said.

Ip added that while there are signs for optimism regarding the supply of private flats, a shortage of spade-ready sites could lead to a gradual flat-lining.