26 August 2019
Public and private housing estates stand together in Kowloon. We have a frenzied property market because of the very limited supply of public housing units. Photo: HKEJ
Public and private housing estates stand together in Kowloon. We have a frenzied property market because of the very limited supply of public housing units. Photo: HKEJ

Public housing for 60% of HK people: a noble, viable goal

“Our goal is to provide public housing accommodation to 60 percent of our population, through more efficient land use, and by increasing the supply of public sector housing and redeveloping old public rental estates,” chief executive contender John Tsang proclaims in his election platform.

So far Tsang is the only one among the aspirants to Hong Kong’s top office who has mapped out a clear policy target in alleviating the city’s chronic housing woes.

Tsang’s “60 percent” goal requires great gumption to realize amid all the dithering and doubts.

Incumbent leader Leung Chun-ying was the first to pour cold water on Tsang’s election pledge on public housing.

When asked to comment on Tsang’s platform, he raised the rhetorical question of whether the government should cease selling land for private developments.

Leung, whose feud with Tsang is an open secret in Tamar, went on to warn that such a drastic shift away from the private property market could only lead to further surges in prices and rents.

A reality check

How feasible then is Tsang’s idea, and if it is, how long will it take to bear fruit?

Around 1.13 million households lived in various public rental units across the territory in 2015, while the corresponding number of families in private homes stood at 1.33 million, according to the 2016 Hong Kong Annual Digest of Statistics. The public to private housing ratio was 45.9 to 54.1.

Population growth forecasts must be factored in when figuring out the number of new public rental units to be built in the future.

The number of households is projected to reach 2.75 million in 2027, according to a 2015 Census and Statistics Department report.

If the “60 percent” goal is to be achieved in that year, then 1.65 million families out of the total 2.75 million will have to be living in public housing estates, 520,000 more than the 2015 figure.

This means the government has to come up with more than half a million rental units in the next decade, which looks almost unattainable, considering that the Hong Kong Housing Society and the Hong Kong Housing Authority, the two major providers of such units, can only build a maximum of 94,400 homes in the next five years.

But the government won’t fall short of its overall supply target if it allows 20 years to house 60 percent of residents by 2037, during which a total of 600,000 rental homes have to be constructed. That number translates into some 30,000 units per year from now on.

If it’s viable, then how to do it?

Leung rebuked Tsang for his “quixotic” idea, arguing that the only way for the government to reach the target is to stop selling land to private developers.

That prospect may spook the business sector and investors, but how about taking back a third of the plots?

The government has on average auctioned 30 hectares of land every year over the past five years, with annual revenue ranging from HK$60 billion to HK$70 billion.

Government coffers will lose some HK$20 billion – a manageable amount given its gigantic financial reserves – if a third of such land, e.g., 10 hectares per year, is rezoned for public housing, enough to build 10,000 extra homes for our grassroots families.

The core question here is whether officials have the guts and wisdom to battle the city’s moneyed class and take the “trophy assets” back from the pockets of property tycoons.

Meanwhile, Leung has tried to paint a gloomy picture that less supply in the pipeline will push up prices of private homes, driving more to join the already long queue of public housing applicants.

That is a fallacy, if not an elaborate lie.

The truth on the ground is just the opposite: the private market is hot because the grassroots and the middle class have no option other than to turn to the private market to buy or rent homes, since the supply of public housing units is unable to meet their needs.

The private market will cool down if these buyers can be accommodated by public housing.

Let’s not forget that Hong Kong’s frenzied property market and the government’s huge revenue from home transactions happen at the expense of millions of grassroots and middle-class families.

In the face of hysterical speculation in the market, the government likes to beat around the bush by introducing tax curbs while shying away from its primary obligation of expediting public housing developments.

Concerns about supply shortage in the private market can be mitigated by measures that will have a real impact on the sector, like vacant property tax and property taxes charged at progressive rates.

Consider the facts: More than 160,000 Hongkongers have three or even more properties under their names, the Rating and Valuation Department said in 2013, and, the city had 1.51 million private homes as of the end of 2015 yet the number of households living in these properties was only a little over 1.33 million.

More work needs to be done to push owners to sell or rent out their unoccupied homes.

Basic human right

As for the notion that more private ownership is conducive to stability, I can only say that this sort of stability is a privilege for property owners, but a luxury for those in the ever-growing queue of public housing applicants, and those who have no other choice but to settle for a subdivided (and sub-human) flat or even bedspace.

Homes are for people to live in. They are not meant to be tools for speculation or profiteering. A decent living environment is a basic human right.

The government will be doing a great deed beyond measure if it can provide public housing to 60 percent of the Hong Kong people.

This article appeared in the Hong Kong Economic Journal on Feb. 13.

Translation by Frank Chen with additional reporting

[Chinese version 中文版]

– Contact us at [email protected]


Read more:

Vast land supply hiding in plain sight, so where’s the problem?

Who should we blame for our small living spaces?

Too tight for sex, too harsh for babies

The government will need to build 30,000 public rental units in the next 20 years to achieve the "60 percent" goal, factoring in population growth forecasts. Photo: HKEJ

A member of Shadow Long Term Housing Strategy Steering Committee, a non-governmental organization.

EJI Weekly Newsletter

Please click here to unsubscribe