Resolving the housing problem has remained at the top of Chief Executive Leung Chun-ying’s agenda since Day 1.
However, two years have passed since he took office, and despite policy tightening, which did manage to curb property prices temporarily, home prices and rents in Hong Kong remain sky-high.
It has become clear that we might be in the midst of the worst housing and rent affordability crisis this city has ever seen.
Although homeownership or rental needs might vary between different age groups and income groups, there is no doubt that the administration’s housing policies have failed to cater to the needs of middle-class families.
In the face of soaring property prices and rents, it appears that the middle class in Hong Kong, who contribute so much to the government’s revenue each year, will continue to suffer, with their voices not being heard and their demands not being attended to.
The government’s attempt to stabilize the property market by increasing supply has so far proven futile, because most middle-class families in Hong Kong are not covered by public housing programs, where a major part of the government’s supply expansion is concentrated.
Recent statistics from the Rating and Valuation Department show property prices rose six months in a row to September, by a total of 8.6 percent, already exceeding last year’s full-year increase of 5.4 percent.
In particular, prices of small flats rose by a whopping 9.4 percent, surpassing the gains in all other types of housing in the same period.
Even though the government has introduced measures in recent years to limit the size of newly built flats, to secure a supply of small and affordable units, property developers continue to reap huge profits by packaging and marketing their flats as luxury homes.
To make matters worse, some developers try to create an illusion of a shortage of supply by deliberately hoarding land and flats to drive up prices.
To many middle-class couples, buying their own home often looks like a dream that will never come true.
Given the skyrocketing prices of homes, I believe the administration must address issues like how to prevent developers from hoarding — for example, by introducing special provisions in land sale contracts and enhancing oversight and transparency — to achieve a healthier, fairer and more sustainable property market.
In addition, the government should review and redefine the role of the Urban Renewal Authority (URA) to make sure its urban redevelopment programs are in line with government policy.
It is also important for the URA to strike a balance between affordability and market pricing and to avoid building and selling only luxury homes.
The government should also consider rebuilding vacant, run-down hostels for civil servants into public housing.
These empty premises are scattered across the territory and often occupy key urban locations, making them the perfect solution to the shortage of land for building homes in urban areas.
Of course, buying one’s own home is not the only option, and the financial tsunami back in 2008 and the economic downturn that followed did push a lot of middle-class families out of homeownership into rentals. However, these people are also suffering, as rents in Hong Kong have hit record highs.
Rents in Hong Kong rose 4.2 percent between the start of the year and September, already surpassing last year’s full-year increase of 3.9 percent.
Worse still, incomes for most middle-class families have not been going up as fast as inflation, and hundreds of thousands of tenants are paying an unbearable portion of their incomes in rent.
For years, the government has either turned a blind eye to or delayed action on the issue of soaring rents, insisting that it will not reintroduce rental control.
As a result, tenants remain at the mercy of their landlords. In fact the reintroduction of rental restrictions that favor tenants could provide a degree of support and a guarantee of housing for families with low or moderate incomes who can only afford to rent their homes.
In my opinion, the government should also consider pursuing short-term measures such as extending the deadline for tenants to move out of their rented property when served with an eviction notice, or legally capping rent increases to ease the pressure on tenant households.
In fact, what our middle-class families hope for is not direct subsidies like cash grants but a more regulated housing market that can offer them more choice and protection.
The middle class in Hong Kong always pay their taxes on time and seldom rely on the government for support.
Their grievances arise not from the economic downturn but from the government’s failure to regulate the housing market properly and prevent big developers from making huge profits at the expense of the public.
Therefore CY’s administration must review its entire housing policy and re-examine the housing needs of different walks of life.
The housing problems facing our society are deep-rooted and complicated, and it will certainly take vision, courage and careful planning on the part of government to address them.
Building more public housing estates wherever we can without proper management and oversight will never get to the bottom of the matter.
This article first appeared in the Hong Kong Economic Journal on Dec. 12.
Translation by Alan Lee
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