Housing has been the top priority of the Hong Kong Special Administrative Region government over the past years. From the Lantau Tomorrow Vision and green belts to temporary homes and even the “big debate” on land supply launched three years ago, many ways to supply land and affordable housing have been explored. Despite such endeavors, Hong Kong’s housing problem has undeniably deteriorated, and it is worth a timely rethink on the approach.
Xia Baolong, director of the Hong Kong and Macao Affairs Office of the State Council, declared on July 16 that Hong Kong will bid farewell to cage homes and subdivided flats, with our next generations finding housing affordable.
Nevertheless, the Centa-City Leading Index, which reflects Hong Kong’s house prices, hit a record high again in early August, further demonstrating the great divide between the haves and have-nots.
The central government has made clear Hong Kong’s housing problem is beyond tolerance. As Vice-Premier Han Zheng said, “The housing problem in Hong Kong is related to its history and development. Although it is difficult to solve the problem, we still need to start the work. If we just lay aside the problem and don’t come to a consensus or come up with an idea, especially when a solution was about to emerge and then the operation of Legislative Council was always interrupted by filibustering, Hong Kong people’s interests will be harmed.” From now on, there is no more filibustering in the Legislative Council. It is time for Hong Kong’s political actors to come to a consensus to solve the housing problem.
On our way towards the nation’s second centennial goal, we must have the resolve to put an end to the housing problem. Hong Kong’s upcoming generations of political leaders must come to a consensus and face the inner demons on “big market, small government”, rebuild the homeownership ladder, achieve common prosperity, and fight for better lives of our residents
A rapid and significant increase in land supply is key to meeting residents’ housing needs. With only 25.1 percent of land being developed, Hong Kong has to adopt all feasible solutions on short-, medium- and long-term supplies of land. These include rezoning; a plot-ratio increase; urban renewal; new town development; railway projects; selective development of country park peripheries, frontier closed areas and brownfield land; Kwai Tsing Container Terminal relocation; the Land Sharing Pilot Scheme; land resumption; and even reclamation. After all, there is no one silver bullet but supply from multiple sources and support from multiple channels.
In addition to land supply, a deeper understanding on wealth inequality is required to solve the housing crisis once and for all. While housing, employment, healthcare, and inequality were named vital livelihood issues by Xia, they are in fact four in one: With Hong Kong’s ultrahigh capital concentration, disparity between the haves and have-nots widens over time. When ordinary people and university graduates struggle amid staggering wages and falling real income respectively, the rich have become far wealthier through accumulating properties. Homeownership has become a fundamental driver of the widening wealth gap.
As such and given Hong Kong’s capitalist economy, public housing is more than welfare for the poorest or a roof for the homeless, but an opportunity to overcome inequality: If every family can affordably own their home, we could not only meet basic housing needs but also reignite upward mobility, narrow the wealth gap and promote social stability.
Hong Kong can learn from the central government’s philosophy and principle on housing policy. Back in 2016, President Xi Jinping famously noted the principle that “housing is for living in, not for speculation”. At the 19th National Congress of the Communist Party of China a year later, he reiterated this principle: “We must not forget that housing is for living in, not for speculation. With this in mind, we will move faster to put in place a housing system that ensures supply through multiple sources, provides housing support through multiple channels, and encourages both housing purchase and renting. This will make us better placed to meet the housing needs of all of our people.”A short paragraph, but clear layout of both the principle, implementation strategy and ultimate objective of the central government’s housing policy. Such a philosophy and principle are equally applicable to Hong Kong and should be the greatest consensus and strongest argument on our road to solve the housing problem.
To make housing accessible with no speculation, Hong Kong must establish an affordable housing market that is fully ring-fenced from the free market. In 2021, over 70,000 public rental housing households were applying for “green form” subsidized housing, representing a long sigh of their homeownership dream crushed by unforgiving price tags of private homes. On the contrary, the Singaporean government successfully meets residents’ housing needs by proactive intervention and significant subsidies for home purchase, with 90 percent of Singaporean households owning their homes. Hong Kong can definitely draw reference from Singapore for an affordable and ring-fenced subsidized housing market:
The first step is to selectively allow subsidized purchase of PRH flats. In addition to existing tenants, PRH applicants could choose to either buy or rent their new homes. This step is similar to the former Tenants Purchase Scheme.
The second step is to ring-fence PRH from the free market to prevent speculation. This involves amending the Housing Ordinance and relevant deeds to ensure PRH flat can only be resold at the original purchase price in the first five years; and forbid PRH resale in the free market via a premium payment arrangement. In other words, all PRH flats can only circulate among PRH tenants and qualified applicants, and thereby be fully separated from the free market.
With these two steps, low-income residents would first rent and buy PRH flats, accumulate wealth over time, and then gradually move into private residences, realizing upward mobility.
The society has had long discussion and feedback regarding PRH ownership and the TPS. Below are four frequently asked questions:
Would a TPS reduce the PRH supply? Upon being allocated PRH flats, households would try hard to stay. Without a TPS, lower-income households are stuck with house prices they can’t afford; such PRH flats stay uncirculated with their social value undermined; and social mobility stays low. In short, everybody loses.
By terminating premium payments and the removal of resale restrictions, PRH flats can circulate only among PRH residents and qualified applicants. As such, even if PRH owners resell their flats one day, new buyers will still be PRH tenants or qualified applicants that PRH is designed to help.
Is the TPS just another form of redistribution? Would there be speculative trading? PRH households have few assets and slow income growth — such subsidized sale can help PRH households accumulate wealth and regain long-lost upward mobility. After all, social policy should encourage our residents to strive for better lives, rather than “lie flat”, or forgo demanding careers in favor of a simpler life.
While the central government’s principle that “housing is for living in, not for speculation” involves suppressing speculation via purchase and borrowing limits, deleveraging, restricting frequent trading, etc., it is not against accessible homeownership. The Hong Kong government should also take note of the wisdom behind this principle. In fact, first-tier mainland cities have achieved a homeownership ratio of over 70 percent, far surpassing Hong Kong’s 50 percent. Homeownership has also been core to Singaporean housing policy, which has perfectly met housing needs for all of the people, with no speculation.
How does one resolve the challenges of maintenance and property management under a TPS? With Hong Kong residents’ high caliber, professional and technical issues are always solvable if there is consensus. Taking maintenance as an example, the Housing Authority, which is already managing all public housing estates, could establish funds for maintenance provision. Another form of adjustment could be by the rate of a TPS discount. There is also no such problem for the sale of new PRH estates.
Will subsidized sale of PRH be detrimental to private house price? In the future, when PRH owners resell their flats, they will have more capital for private housing. Thus, the impact would be limited.
Among solutions proposed, relaunching the TPS is the best immediate tool to gradually create wealth for the many. On top of it, the homeownership program should be the core of a public housing policy, which would help solve deep-seated issues, including inequality.
Whether and how to relaunch the TPS would require consensus. After all, a housing policy has close ties with social policies, and is beyond simply meeting the needs of PRH applicants. Through proactive intervention and an increased homeownership ratio, it could promote social stability, narrow the wealth gap, and reduce inequality.
On our way towards the nation’s second centennial goal, we must have the resolve to put an end to the housing problem. Hong Kong’s upcoming generations of political leaders must come to a consensus and face the inner demons on “big market, small government”, rebuild the homeownership ladder, achieve common prosperity, and fight for better lives of our residents.“One shall have his peace of mind when he possesses a piece of land.” I firmly believe that if most Hong Kong families can own their own homes, our society will be more vibrant, more hopeful, more prosperous, and more stable.
The author is a board member of the Chinese Association of Hong Kong and Macao Studies.
Source：China Daily ［2021-09-17］
