Hong Kong’s housing and urban development targets will continue to be out of balance unless the government increases land supply, the Hong Kong Economic Journal reported Tuesday, citing its own research.
Land shortage has created social issues that are subject to political pressure, impeding efforts to implement a sustainable housing and urban development plan.
As a result, housing prices and urban development costs are surging, the report said, citing urban planning experts.
For instance, housing estate Tai Koo Shing has seen the price of large flats surge 17 times in the past 30 years.
Prices in City One in Shatin have risen 15-fold during the same period.
Since the 1970s, Hong Kong has relied on reclamation to expand its land bank.
The government set a target of 85,000 new flats each year during the administration of Tung Chee-hwa but failed to sufficiently address land shortage, according to Pun Kwok-shing, former director of the planning department.
Chief Executive Leung Chun-ying faced a similar problem in his plan to build 47,000 units last year.
Pun, who was involved in developing nine new towns in the 1980s, said the aggressive build-up then is in stark contrast to the slow progress under Leung’s administration, mainly due to the political environment.
Land supply has been a sensitive issue in Hong Kong since colonial times, according to Lawrance Wong, founder and president of Many Wells Property Agent Ltd.
Wong has seen the ups and downs in the property market since before Hong Kong’s handover to China and said there is no sign the land supply problem will be resolved any time soon.
In 1983, prices fell about 40 percent amid anxiety over Hong Kong’s future.
After China and Britain signed the Sino-British Joint Declaration, which paved the way for the peaceful handover of sovereignty, property prices started to recover only to take another blow in the aftermath of the June 4, 1989 Tiananmen crackdown.
Home prices continued to rise until the handover in 1997 after falling 70 percent during a six-year run.
In 2003, China’s individual tourist scheme fueled a boom in Hong Kong’s economy and the property market.
Although prices fell in 2008 by 25 percent due to the global financial crisis, they rebounded and kept surging until now as a result of capital inflows triggered by quantitative easing in the United States.
In 2012, the government introduced curbs to rein in property speculation but failed to lower home prices.
A former government official blamed the failure of the initiative on a lack of land supply.
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