The housing blues in Hong Kong

PC Lau

Surveyor, and one of Chief Executive CY Leung's housing policy advisors

The root cause of the housing problem in Hong Kong is inadequate supply owing to land supply shortage. That is because, for a certain period in the past, the government did not provide enough land. It had neither land planning, nor did it show any initiative to recover sites.

In 1997, about 30,000 public and private housing units were built. But in recent years, the yearly output was about 8,000. The supply shortage, aggravated by the influx of hot money, prompted property prices to soar rapidly out of reach of most people.

The inadequate supply was also due to the slow, tedious approval processes and lack of coordination involving government departments.

For public housing, the government needs 75 months to build a 40-story block. This is far too slow compared to just 20 months for construction of a private residential block with 6,000 units, in which I have been involved, knowing that government projects are exempt from inspections by various departments. It must simplify the procedures and make greater use of private sector participation.

We should also increase the plot ratio in urban areas, to increase housing supply. I was surprised to know that land supply was not within our terms of reference. If we discuss housing without access to land supply, it will create panic, because the public doesn't know if there will be enough sites to build flats.

After lengthy discussion at the first steering committee meeting, Secretary for Transport and Housing Anthony Cheung agreed to amend the terms of reference.

In calculating the housing demand, we need to consider such factors as population change, composition of families and birth rate. We also need to consider the change in the economic structure in relation to the types of flats we should build.

High earners in the financial and IT sectors have greater demand for housing and so better, larger flats will be needed. If we focus on the general public, then more low-priced, smaller flats should be built.

In my view, our housing strategy will be supply-driven, but not demand-driven. If the government has adequate lands, it has an upper hand as to timing on the launch of sites, the types and quantity of flats to be built.

It will be too passive if the housing strategy is demand-driven. We can't set a yearly construction target of, say, 20,000 flats before we look for sites, because four or five years are needed for construction. But then it will fall behind demand and the government will be manipulated by the property developers.