The SAR government is now able to focus on resolving deep-rooted socioeconomic issues, especially the chronic short supply of affordable housing for the great masses, after the promulgation of the National Security Law in the Hong Kong Special Administrative Region has effectively forced the political radicals to stop most illegal activities and restored peace and stability in society.
The severity of the housing problem in Hong Kong is quite self-evident. According to the “Global Living Report 2020” released by CBRE recently, Hong Kong remains “the most expensive property market in the world”. Meanwhile, the “2016 Population By-census” estimated that there were some 92,700 subdivided units in Hong Kong that year, and approximately 210,000 people were living in such inadequate housing. The housing shortage has also contributed to the wealth gap between those who own real estate and those who do not. It goes without saying that tackling the land and housing shortage is a “must-do item” in resolving the deep-seated problems plaguing the city.
Although Hong Kong society generally agrees that the housing shortage is a huge problem, there are different opinions on its hidden causes. The discussion of such causes may seem reasonable but in reality it has been more of a waste of time than any help over the years. For instance, one of the most blamed “culprits” is purchases by mainlanders that drove property prices up. This argument apparently appeals to those subscribed to the “localist” political narrative but lacks statistical support. Since the introduction of the Buyer’s Stamp Duty (BSD) in October 2012, housing market demand from non-local buyers has flagged significantly. Figures released by the Inland Revenue Department show that monthly transactions in November 2012 through December 2014 by non-local residents and non-local firms dropped to 115, which account for only 2.1 percent of the total. This is much lower than that of January 2012 up to the introduction of the BSD in October, with an average of 365 transactions per month, accounting for 4.5 percent of the total. Furthermore, the launch of the Special Stamp Duty (SSD) in November 2010 and the subsequent increment in the SSD in October 2012 have drastically curtailed speculative activities in the housing market. Therefore, given the sharp decline in speculative activities by non-locals, the true cause of persistent property price hikes can only be rigid demand for affordable housing by local residents. Laying the blame on mainlanders is merely a misdirection to hide the real cause, which is the existence of a genuine supply shortage of housing for the locals.
As far as the housing shortage is concerned, it is said that there will not be a robust demand for housing in the future because Hong Kong’s population is projected to peak at 8.1 million in the 2040s and is anticipated to fall afterward. This is a fallacious prediction in which population is mistaken as the only indicator of housing demand, which means little if anything without the number of households. As Hong Kong further develops, the average household size shrinks while the number of households grows, the growth rate of which far exceeds population growth. For instance, Hong Kong’s population increased by 15 percent when the number of households surged by 36 percent from 1997 to 2019. Therefore, it is predicted that the housing supply will continue to be dwarfed by demand in the foreseeable future.
It is crucial to clear up misdirection and misconceptions about the housing shortage in Hong Kong, as they are causing the community to lose focus on the real cause of the problem. While the housing supply is key, it will take some time to increase. Had the “85,000 Policy” proposed by the first-term SAR administration been successfully implemented back in the 2000s, which would have added no less than 85,000 public and private flats a year starting in 1999, the housing situation would have been different today. We must now concentrate on increasing the supply of land and housing, and stop wasting time on misguided debates. A concerted effort to formulate policies that increase land supply is key to resolving the housing shortage and social discord, the two major stumbling blocks in Hong Kong’s way toward lasting stability.
The author is senior research officer of the One Country Two Systems Research Institute.
The views do not necessarily reflect those of China Daily.
