Re-launch Tenants Purchase Scheme to create common Prosperity
Shortly after becoming a moderately prosperous society in all aspects last year, the Mainland launched the National 14th Five-Year Plan to pursue the goal of common prosperity by reducing the wealth gap. For Hong Kong to resolve the deep-seated conflicts, the HKSAR Government shall abandon the outdated policy of “Big Market, Small Government” and enhance governance efficiency with decisive investment to stride towards common prosperity.
To achieve common prosperity under “One country, Two systems”, Hong Kong should act according to local conditions by capitalising on its small but open economy and consolidating its position in the Greater Bay Area with an international vision. Coupled with multifarious measures and sound coordination, the city’s economic structure can be upgraded and transformed, enabling high-quality development. Hong Kong should also foster fairer competition and boost vitality in the market by means of the market mechanism.
A key to common prosperity in Hong Kong is creating a new social contract in the housing aspect by establishing a public housing system akin to Singapore’s. Our Hong Kong Foundation (OHKF) proposes that the government can pledge to offer eligible citizens an opportunity to purchase public housing at affordable prices. This can increase the homeownership ratio from the existing 50% to above 70%, allowing the majority of local families to share the fruit of economic development amidst a rise in asset value. The target of the proposed public housing system is to reduce the wealth gap between those with and without property, allowing more of those who rent public housing to become homeowners at affordable prices. Thus, more families can enjoy the fruit of prosperity and land appreciation.
The ownership of public housing has brought Singapore lasting prosperity and stability. Their homeownership ratio is over 90%, and 80% of residents live in the 1.1 million public housing flats (HDB flats) sold by the government at low prices. Thus, OHKF believes that such a system should be implemented in Hong Kong to revamp the current public housing system which focuses on rental housing. Homeownership can offer a sense of security and opportunities for asset appreciation, realising the dreams of more would-be homeowners.
Precisely speaking, public rental housing limits land value due to the lack of transactions in the market. In addition, the quota limit imposed on the second-hand market of the Home Ownership Scheme flats with premium unpaid makes it more difficult to boost sales. Hence, it is essential to re-launch the Tenants Purchase Scheme and allow public rental housing residents to buy their flats at low prices, aiding low-income families in accumulating wealth through homeownership. Meanwhile, the government ought to relax the restrictions on the public housing second-hand market to boost transactions and improve the utilisation of the flats. Two relatively distinctive rungs on the property ladder, i.e. the public and the private housing markets, should also be created in the overall housing sector.
Last but not least, the essence of such a scheme is not limited to homeownership, but it can also expedite land development to increase housing supply.
Urbanisation is pivotal to large-scale land development. Currently, only 20% of land in Hong Kong has been used for urbanization development. It is vital to increase that proportion to 50% to catch up with Shenzhen (while that of Singapore reaches 70%). It hinges on the government’s action as only the government is capable of planning new towns with the provision of infrastructure such as roads and railways. With the determination to speed up urbanisation, be it through land resumption or reclamation, the balance, coordination and inclusiveness of the development in the property sector can be enhanced.
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