Housing Affordability: A land, planning or political question?

Speakers

According to the Demographia International Housing Affordability Survey, Housing in Hong Kong has been the least affordable among the world’s major metropolitan housing markets since 2010. Its house price-to-income ratio is 20.7, three times more than Singapore’s. The deteriorating housing affordability has led to lengthy debates across society. The government has also attempted to manage demand and increase land supply. However, a tremendous gap between demand and supply remains. Whether unaffordable housing in Hong Kong is caused by the shortage of land, planning restrictions, or community politics? Is Singapore’s experience applicable to Hong Kong? On 19 February 2022, Prof. CHEUNG, Prof. LOW, and Dr. Wong shared their views and offered potential solutions to the problem.

Professor CHEUNG first explained that unaffordable housing in Hong Kong is fundamentally a result of severely low supply and very solid consumption and investment demand in the housing market. Therefore, the government must tackle both the supply and demand sides. He believed that even if a city faces a land constraint, it could still increase its housing supply by using land more intensively. Yet, due to the lengthy planning process, diverse social interests, narrow-sighted politics, and limited government capacity, Hong Kong cannot increase its land supply quickly and significantly.

In the short-to-medium term, he suggested that the government can develop brownfield sites, tap into private agricultural land, and modify the uses of sites under private leases. In the medium-to-long term, the government must develop new areas, e.g., the Northern Metropolis, the East Lantau Metropolis, and the reclamation land outside Victoria Harbor. In addition, Hong Kong needs to reform the planning system by enhancing the flexibility of the zoning system, streamlining the planning process, and strengthening inter-bureau/department coordination.

Professor LOW first shared Singapore’s successful experience in public housing policy. In the 1960s, there were 350,000 households in Singapore but only 250,000 proper housing units. Moreover, housing conditions were poor and basic facilities were scarce. However, the Housing and Development Board (HDB) was able to tackle the crux of the problem very quickly. By 1975, nearly half of Singapore’s population lived in HDB flats. Since 1985, the population living in HDB flats has remained above 80%. There were also various size and quality options within HDB neighborhoods to cater to the demands of different income groups.

Professor LOW second comments that public housing policy in Singapore has been designed to achieve multiple objectives, including home-ownership, social and ethnic integration, building a “productivist” welfare society, ensuring retirement security, and demonstrating a high-performing government. Hong Kong could learn from Singapore’s experience. Nevertheless, Hong Kong cannot simply copy Singapore’s housing policy since it faces far more constraints than Singapore. For instance, the Land Acquisition Act enacted in 1966 enabled the Singapore government to acquire a large amount of land at a reasonable cost. Moreover, due to a strong government, the Central Provident Fund guided the population to accumulate considerable savings for down-payment and monthly installments for HDB flats. These elements are absent in Hong Kong.

Dr. Wong first notified that land development in Hong Kong lagged far behind the need. He estimated that 9,080 hectares of land are needed in the next 30 years, including 4,800 hectares for the Hong Kong 2030+ mega project, 3,520 hectares for residential living space enhancement, and 760 hectares for facility land enhancement. Currently, the total potential supply is only 7,100 hectares. Hence, he recommended that the government expand the Lantau Tomorrow Vision and allocate extra areas in the New Territories for an additional supply of 3,600 hectares. In addition, he proposes two new railway projects and two major road projects on top of existing government plans.

He second warned that if housing unaffordability in the short run is not tackled, many talents will relocate to other cities. Furthermore, social tension will become unmanageable. To satisfy the urgent demand, he suggested accelerating the development projects in the upcoming decades by streamlining development processes, e.g., simplifying leases, proceeding with reclamation works and town planning procedures simultaneously, and making proactive and professional judgments during district consultations. In terms of housing policy, he offered a series of recommendations, notably re-launching the Tenants Purchase Scheme (TPS), providing rent subsidies, fully opening up the White Form Secondary Market, and providing interest-free loans to first-time buyers.

Despite the severe land constraint, speakers generally agree that unaffordable housing is a pressing social issue in Hong Kong, but it is not unmanageable. To tackle the problem, the government must adopt a “whole-of-government” approach and act decisively to streamline the planning process, develop new areas, and improve the public housing policy.

(From left): Prof. Anthony B.L. CHEUNG, Prof. Donald LOW, Dr. Stephen WONG