19 December 2018
Hong Kong can at best churn out 28,000 new homes every year, including PRH units. Photo: HKEJ
Hong Kong can at best churn out 28,000 new homes every year, including PRH units. Photo: HKEJ

Time for drastic review of housing policy

Chief Executive Carrie Lam Cheng Yuet-ngor sparked a firestorm of controversy with her remark during a media interview that when the stock of public rental housing (PRH) flats reaches 800,000, it would be sufficient to satisfy public demand.

Her comment immediately raised concern over whether the government is going to cap the number of PRH supply at 800,000 and whether it will push Hongkongers to buy flats.

Lam and relevant government officials rushed to clarify the statement, and Lam herself apologized for causing unnecessary anxiety among the public. But it appears Lam is already losing her grip even before she officially launches the housing initiatives laid down in her policy address such as regularizing the Green Form Subsidised Home Ownership Pilot Scheme.

Perhaps Lam’s little slip of the tongue may present the government with a good opportunity to drastically review its housing policy.

Despite the fact that housing is at the core of our current social problem, the truth is, our government has been actually spending less money on public housing than on education, social welfare, public healthcare and infrastructure. In other words, public housing has not been given priority when it comes to public expenditure.

As far as demand for public housing is concerned, according to government figures, there are currently about one million impoverished people in Hong Kong. That means, in a worst-case scenario, the government may need to provide a million PRH units for them.

But according to the latest Long-Term Housing Strategy announced by the administration, Hong Kong can at best churn out 28,000 new homes every year, including PRH units.

Even if half of these new homes are designated for PRH, it would take 35 years for the government to pull off one million new rental homes for low-income families.

It’s time for the government to go for a more realistic and viable option in boosting our home supply, such as enhancing the Starter Homes scheme exclusively available to local first-time homebuyers, under which the administration should seek public-private partnerships and tap into the vast land reserves of private developers in building these new homes.

To maximize cost-effectiveness, the government can consider slightly raising the plot ratio of these vacant land lots, and in return private developers have to use half of the extra land area to build homes for public rental housing.

This article appeared in the Hong Kong Economic Journal on Nov. 4

Translation by Alan Lee

[Chinese version 中文版]

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