Date
23 November 2017
It would be unworkable for Hong Kong to simply copy and paste the Singapore approach to housing,  independent economist Chan Yan Chong says. Photo: HKEJ
It would be unworkable for Hong Kong to simply copy and paste the Singapore approach to housing, independent economist Chan Yan Chong says. Photo: HKEJ

Why HK cannot afford a Singapore-style housing policy

If there is one thing Hongkongers envy about Singaporeans, it’s affordable property and better living conditions.

Singapore is well-known for its housing policies. Over 90 percent of the citizens are homeowners.

Both are small cities, so why can’t Hong Kong adopt similar housing policies?

As a Singaporean, independent economist Chan Yan Chong explains why and what Hongkongers would have to give up in exchange for such living conditions.

“The government in Singapore uses most of the land to build public housing estates. That’s why it does not have much income from land sales,” Ming Pao Daily quoted him as saying.

“Flats in these public housing estates sell for one-tenth the market price. Meanwhile, flats from Hong Kong’s Home Ownership Scheme are only 30 percent off the market price, a big difference.” 

The lowest price for a home in Singapore is S$80,000 (US$58,400), for which you can get a flat with a saleable area of 600 square feet.

Everything comes at a price.

To balance the equation, the Singapore government imposes much higher income tax rates.

The highest income tax rate in Singapore is 22 percent. In comparison, the rate in Hong Kong is just 15 percent.

The income tax rate in Singapore was once three times higher than in Hong Kong, before a sales tax was implemented.

The lack of usable land in Hong Kong is a reason commonly used to explain the sky-high property prices.

Chan said Hong Kong should consider speeding up its land reclamation program.

“When I arrived in Hong Kong in the 1980s, Singapore was about 500 square kilometers in size. After years of land reclamation, the country has been enlarged by 40 percent to 700 square kilometers.

“If Hong Kong wants to solve the land supply problem, it should consider whether to have reclamation on a massive scale.”

Chan is not suggesting putting environmental issues aside, but Hong Kong people have to make a choice.

There is no perfect solution. People cannot complain about high housing prices on one hand and insist that environmental protection is the most important issue on the other.

Chan said the government should explain the issue clearly to the people and then let citizens decide for themselves.

When Hong Kong’s first chief executive, Tung Chee-wah, visited Singapore years ago, Lee Kuan Yew, the Lion City’s first prime minister, told Tung that if most Hong Kong residents owned their homes, the society would be stable.

However, with the city’s different backgrounds, it would be unworkable for Hong Kong to simply copy and paste the Singapore approach.

Only a relatively small portion of Singaporeans own private flats, which are seen as a status symbol.

Given that, property prices in the country are relatively stable, and even if the real estate market tumbles, it would only have a meager effect on the economy.

However, the situation is different in Hong Kong.

More than half the property owners here own private flats. If property prices tank, it would cause a ripple effect, and the result would be disastrous.

In conclusion, Chan said people in Singapore can live a stable life, but it’s hard to get rich there.

“Singaporeans cannot speculate in property; it’s impossible for property prices to jump 10 times,” he said.

– Contact us at [email protected]

FL

EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe