John Lee vowed to cap the waiting time at six years and cut it to four-and-a-half years by 2027.

Newly built homes and public flats will also come with a minimum size of 26 square meters or 280 square feet.

The LPH scheme will be different from the current transitional housing as the units are bigger and the program will be directed by the government, sources said.

Lee said around 158,000 public housing units, including the LPH units, will be built from 2023-24 to 2027-28, up 50 percent of the 105,000 units.

The units will be built "expeditiously" on government and private land, with "modular integrated construction" method, which will be free-standing modules, manufactured in a factory and then transported to the site for installation.

The LPH can be more than 10 stories high and tenants can live there for five years, he said.

"Those on the waiting list for traditional public rental housing for three years or more may apply for LPH for earlier allocation and priority will be given to family applicants.

Tenants may retain their position in the queue for traditional public rental housing and can move into later on," Lee said. Rent of LPH units will be 90 percent of the traditional public housing rent within the same district. The government is currently reviewing six land parcels and plans to start building early next year, while aiming to complete the first batch of 1,000 units by 2024 at the earliest.

Units with an area ranging between 10 sq m and 31 sq m will have air-conditioners, ventilating fans, water heaters, individual bathrooms and cooking area, sources said.

Authorities will mainly invite families who have queued for public housing for over three years to apply for the new units. But individual applicants will also be considered as there will be smaller units.

"We will seek the Legislative Council's approval for dedicated funding to build and operate LPH. At the same time, we will continue to provide about 20,000 transitional housing units through partnerships with the community," Lee said.

Sources said LPH will be different from current transitional housing as the units are bigger, adding the program will be directed by the government.

And the government will no longer handle transitional housing applications from next year.

"We will still approve transitional housing applications submitted within this year if the developers already have plans for the project and can start it within nine months. But we will no longer handle applications without developing plans starting next year," sources said.

The government will also speed up building traditional public housing units. It is expected that around 12,000 units will be available for advance allocation of about three to 18 months in the next five years, Lee said.

To meet young people's housing needs, the youth hostel scheme will target 3,000 additional places in the next five years.

Young tenants will be charged rents about 60 percent of the market level. In return, they have to commit to offering volunteer services to the community.

More land will be earmarked for Starter Homes to help young people realize their home ownership aspirations, Lee said.

Meanwhile, Kau Yi Chau artificial islands will act as the third central business district to consolidate the city's position as an international financial center. A proposal on the scope of reclamation, land use, transport infrastructure network and financing options will be put out this year, with a target to initiate environmental impact assessments next year and begin reclamation work in 2025.