18 March 2019
Land shortage lies at the root of our ongoing housing affordability crisis. Photo: Xinhua
Land shortage lies at the root of our ongoing housing affordability crisis. Photo: Xinhua

Finding new land and building new homes must go hand in hand

As the public eagerly waits to see how Chief Executive Carrie Lam Cheng Yuet-ngor is going to deliver her “new deal” in her upcoming policy address, particularly on housing, Marco Wu Moon-hoi, chairman of the Hong Kong Housing Society, has brought us some good news during a recent radio interview.

According to Wu, the CE is planning to launch a new housing program exclusively for local first-time home buyers, or to be more precise, the so-called “green form applicants” or current public rental housing tenants and “white form applicants” or non-PRH tenant families with a household monthly income under HK$52,000.

Wu said the prices of these new homes may well be fixed at below market price so that more people can afford them. And since these are subsidized homes, they are likely to be subject to severe re-sale restrictions in order to discourage speculators. For example, they may only be re-sold to other green and white form applicants in the future.

In fact, we are very delighted to learn that the government is finally taking a step in the right direction by separating the private and public property markets and setting the prices of government-subsidized new homes at below market price.

As we all know, home prices in the secondary market of the Home Ownership Scheme (HOS) have been skyrocketing in recent years thanks to the spillover effect of the crazy private property market.

As a result, even HOS flats, which were initially intended to be affordable, are no longer that affordable anymore. And the only way to stem the tide is for the government to completely separate the private and subsidized housing markets.

At the same time, however, we believe the so-called “sandwich class” families, which are neither “green form” nor “white form” applicants, should not be left out of the new housing program, or else the initiative would only further exacerbate social divisions.

Meanwhile, the government must also step up its efforts at finding new land and expediting the development of brownfield sites in order to boost land supply.

Land shortage lies at the root of our ongoing housing affordability crisis. If the administration fails to address this fundamental issue, the new housing program will only end up being a drop in the bucket.

This article appeared in the Hong Kong Economic Journal on Sep 6

Translation by Alan Lee

[Chinese version 中文版]

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