According to the figures released by the Housing Authority, as of the end of March this year the average waiting time for public rental housing (PRH) flat general applicants had jumped to 5.1 years.
Worse still, the applicants number has soared from 111,000 a decade ago to about 272,300 in March, whereas the government has only been able to provide 154,000 PRH flats during the same period of time.
In other words, as the supply of PRH flats has continued to fall behind the soaring demand, one can expect that the average waiting time for the housing applicants is likely to get increasingly longer in the months ahead.
True, this widening gap between demand and supply in public housing can partly be attributed to the fact that more and more local citizens are becoming eligible for PRH flats due to sluggish wage growth among the grassroots over the years.
Nevertheless, it is the government’s failure to provide new land that should take most blame for Hong Kong’s current shortage in public housing.
It is hardly an overstatement to say that the current huge shortage of land is a result of the accumulation of repeated failures in land policies by various administrations in the past.
One might still remember that when the first post-handover leader, Tung Chee-hwa, was in office, he introduced the so-called “85,000” housing policy as part of efforts to boost home ownership in Hong Kong and shorten the average waiting time for PRH flats to three years.
At one point, Tung’s policy was able to rapidly increase the supply of PRH flats, yet as it turned out later, the policy also led to disastrous ramifications. It had caused property prices in Hong Kong to plummet, and as a result tens of thousands of homeowners fell into negative home equity.
Desperate to halt the plunge in home prices, Tung abruptly scrapped the “85,000” policy, and the supply of PRH flats fell from over 40,000 between 2000 and 2001 at its peak to just 4,000 between 2006 and 2007.
After Donald Tsang Yam-kuen succeeded Tung in the top post, he basically adopted a “go-slow” approach to land development throughout his tenure.
As far as Tsang’s successor Leung Chun-ying is concerned, his housing policy was also largely a failure, not least because he relied too heavily on converting existing land lots for housing projects and made too little effort at finding new land.
To address our pressing housing issue, I believe the current administration should give priority to potential introduction of a vacancy tax on first-hand private residential properties and a capital gains tax.
Also, the administration should ditch the current 6:4 ratio in housing development and substantially increase the proportion of PRH flats to private homes.
In particular, the government should tap into its existing land reserves and try its best to allocate land lots to public housing projects in order to shorten the average waiting time for PRH flat applicants.
This article appeared in the Hong Kong Economic Journal on May 17
Translation by Alan Lee
[Chinese version 中文版]
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