Will Carrie Lam Cheng Yuet-ngor dare go where no other chief executive has gone before to tackle Hong Kong’s housing crunch once and for all? Will her administration have the guts to shut Hong Kong’s housing market to all outsiders? Is Financial Secretary Paul Chan Mo-po’s idea of taking action against property owners who hoard vacant flats just empty talk?
In his budget speech in February, Chan floated the idea of penalizing property owners who kept flats vacant. He then told me in a TV interview that about 9,500 vacant were left vacant at the end of last year. With the number rising, he hinted a penalty tax was one option.
We all know why some developers and homeowners hoard vacant flats. They want to further drive up already sky-high home prices. The financial secretary seemed sincere when he told me he had asked the Transport and Housing Bureau to look at how to stop this practice.
Hong Kong’s housing shortage has no light at the end of the tunnel. In fact, there isn’t even a tunnel, so forget about the light at the end of it. It is not illegal for property owners to squeeze aspiring homeowners. Most would, however, agree it is immoral. Taxing vacant flats won’t ease the housing shortage but it’s the moral thing to do.
Greed in the property sector, combined with government impotence, is ingrained in our culture. That’s why Hong Kong’s home prices are the most expensive in the world. That in itself need not be shameful if citizens could actually afford the high prices. But most ordinary Hong Kong people have long been priced out of the market. There is neither government political will nor property sector conscience for this to change anytime soon.
Two months have passed since Chan floated the idea of taxing vacant flats. The idea has since died a silent death. I have reliably heard from some people that Chief Executive Carrie Lam Cheng Yuet-ngor may not be too keen on imposing such a tax. If this is true, the most likely reason is that she has either come under pressure or fears pressure from the property sector.
It would be a mistake to bow to such pressure. Developers have been allowed to get away with too much already at the expense of ordinary people. With empty flats numbering around 9,500, a penalty tax won’t dent the housing crisis but would send a strong message to the people and developers that Lam is serious about solving the housing crunch.
A city-wide public consultation is starting on how best to find land for our future housing needs. It’s bound to be a contentious and divisive debate. Options range from reclamation outside Victoria Harbor and using fringes of country parks to brownfield sites and the Fanling golf course. But the truth is no amount of land can ease the housing shortage and make homes affordable to ordinary Hong Kong people.
Our housing market doesn’t only serve Hong Kong’s 7.4 million population. It also serves the hot money coming in from the growing super-rich of mainland China’s 1.4 billion population. Price is no problem for them because they just want to get their money out.
They consider Hong Kong property to be a good investment. Prices will never come down regardless of how many flats we build. There will always be hot money chasing these flats at whatever price. That means affordable homes in the private sector will remain a pipe dream for ordinary Hong Kong people.
Making Hong Kong homes available only to Hong Kong people goes against the free market principle that we cherish. This principle has long served as the cornerstone of our prosperity. But when the going gets tough, the tough must get going. That means daring to pursue unconventional but bold ideas. Shutting our homes market to not only mainland but all foreign buyers is unconventional and will generate fierce opposition from vested interests led by the property sector. But it’s the only way to make Hong Kong homes affordable to Hong Kong people.
Where will foreigners live? That’s a fair question since Hong Kong thrives on its international status. The answer is simple. They can rent from local buyers. It’s not a perfect solution but there is no perfect solution to our housing crisis.
Former chief executive Leung Chun-ying took the bold step of restricting exiting travelers to taking only two tins of baby milk powder with them. The restriction came as mainlanders drained supplies, infuriating local parents. Yes, it went against our free market principles, as did limiting the number of visits by Shenzhen tourists to combat parallel goods trading. But both measures worked well.
At times of crises, departing from principles is a necessary evil. Unaffordable housing is Hong Kong’s biggest crisis, far bigger than the lack of democratic reforms. It is the source of the greatest disillusionment and unhappiness among Hong Kong’s young people. It is a ticking time-bomb that, if left unsolved, could explode.
Lam’s predecessors have all tried conventional means to tackle the housing crisis. None of them worked. Conventional methods can’t work because our unaffordable housing is not a conventional crisis. We are a tiny and free society that is part of China where the super-rich see us as a haven for their money.
Leung Chun-ying’s Hong Kong property for Hong Kong people in Kai Tak failed because it had too many loopholes. Buyers could rent or re-sell to outsiders. This allowed buyers to abuse the spirit of the plan. Hong Kong people have waited too long for bold thinking by our leaders.
Lam can cement her popularity and win a second term as chief executive hands down if she has the guts to tax vacant properties and impose a ban on outsiders buying Hong Kong flats. The ban need not be permanent. It only needs to stay long enough to bring sanity back to the housing market. But will she dare do it?
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