Life is full of complicated one-way running games. Acquiring a place you can call your own is one of those.
Just like in a running game, the housing price keeps getting ahead of us as we struggle to catch up. In recent years, the property price has climbed up crazily, and most ordinary citizens have been forced out of the game.
In fact, some have opted to change the rules of the game. For example, some people have chosen to take part-time jobs and have their salaries frozen in order to stay qualified for applying for public rental housing or the subsidized home ownership scheme.
Tips on how to land public rental housing by quitting your job have become a hot topic on social media after the annual budget speech. The government is trying to see to it that citizens from all social classes share in the economic growth, but this has sent a wrong signal to citizens.
Nowadays, it’s really tough to climb through the social ladder, and even those in the middle class are struggling. That has indirectly motivated some people in the lower class to reduce their productivity in order to fit into the public housing program.
The current public housing policy has not offered any incentive for those who are self-reliant; instead, it has motivated some to fall into the welfare net. That could stifle productivity and competitiveness in society.
Also, Hong Kong’s population has not declined despite the falling birth rate, and housing supply growth has lagged far behind the increase in demand. As a result, the land price continues to rise.
Carrie Lam Cheng Yuet-ngor, former chief of the Development Bureau, noted in 2012 that “the land won’t be sold cheap. Even if the land price declines, the housing price may not necessarily go down”. She also said sites set aside for building private flats did not bid well in the market, despite resilient housing demand.
In such a case, authorities would allocate the land to the Housing Society or the Housing Authority for building subsidized flats or flats under the home ownership scheme.
Facts speak louder than words. Hong Kong relies so much on property tax in terms of fiscal revenue, and as such, it’s somewhat unrealistic to expect government to roll out measures that will sharply affect the property price.
Many Hong Kong residents struggle throughout their lifetime to find a place to dwell in. A decade ago, many young friends were confident about buying their own flat. However, housing prices have spiked much faster than the growth of their salaries over the years.
Currently, home ownership scheme and other subsidized flats have set a threshold that is beyond the reach of many qualified young people. They are only allowed to borrow up to maximum of 60 percent for self-use residential properties valued below HK$7 million, compared with loan-to-value ratio of up to 70 percent previously. That has further frustrated the dream of young people to buy their own home.
The Hong Kong government should review the household income and asset ownership requirements for those applying for public rental housing or subsidized flats.
There is a large gap between the public rental housing and private housing markets. For example, the government could use some public flats and offer them at a rent between the public and private market levels.
The authorities should also review the income situation of tenants every five years.
This article appeared in the Hong Kong Economic Journal on March 13.
Translation by Julie Zhu
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