Don't blame Donald for Hong Kong's housing problems
In the second of a three-part series on the [former] chief executive's time in office, we look at his failure to solve the intractable problems buffeting the housing sector.
SCMP, June 29
Irecognise that it's Jump-on-Donald time. Any politician who has ever swung any weight has to expect it at the end of his term of office. All his critics get one last kick at him before tying up the laces of a new set of boots to kick his successor.
But just how can failure to solve an intractable problem be made a count against him?
If a thing cannot be done, then not being able to do it is fate, not failure.
We do have the right word here, however, in 'intractable'. There are some problems in the Hong Kong housing market that no government policy can solve over the term of office of a chief executive.
High housing costs in the private sector, for instance, are mostly the result of a long period of extraordinarily low interest rates.
With our peg to the US dollar, there is nothing any government official can do about this. Our interest rates must follow US rates in our currency regime. If there is failure here, blame the governors of the US Federal Reserve Board.
Nor will increasing the supply of housing do much. Leave alone that this curious tap can only produce a trickle three years after you turn it on, or five years if you want a decent flow, and cannot be turned off in periods any shorter, there is actually no shortage of housing.
The figures as of late last year indicate that we have 2.6 million homes for 2.35 million households, which implies that 250,000 flats lie vacant. Every housing market has a residual vacancy rate, but one as large as we have indicates that many owners are deliberately keeping their flats empty.
It's a time-honoured phenomenon in this town. Property speculators tend to take the view that occupancy obstructs resale. If you want the best price when you sell that flat, then sell it empty. The flood of mainland speculators we have seen in recent years certainly considers this a law of the universe.
Our government has tried to combat this tendency with punitive stamp duties on quick resale of flats, but all this seems to have done is reduce liquidity in the property market. It has not done much to restrain prices, and it has done nothing to change perceptions. The empty flats held by speculators stay empty. Shall we then build more flats for them to hold empty?
Where Donald draws the greatest censure in housing, however, is for his administration's record in public housing. He should have built far more, say the critics, both in rental and sale form. There are too many people still living in cage homes, and the waiting list for public housing has grown.
Let's observe here first that it's no wonder public housing has drawn so many applicants when the average rent for a public sector flat is only about HK$1,200 a month, with regular rent forgiveness periods even then, and rental accommodation in the private sector is not available for even 10 times as much.
I'm not trying to be callous about the miseries of people who live in cage homes, but with a Housing Authority that has 750,000 rental flats on its books and a further 300,000 discount sale homes, our government has an excellent record of providing housing for its people.
In public housing, however, it seems that the more freebies you give the tenants, the louder they sing their theme song - The World Owes Me a Living. We have created an entitled class that has been excused the obligation of holding any equity in the economy that sustains it.
This is a prescription for social irresponsibility.
But even if these people were forgiven payment of any rent, it would do them no good. Their bosses know their cost of living and adjust their wages accordingly. Public housing has perversely become a form of employer subsidy as a much as it is a social service.
And public sale housing is a lottery. Only a tiny number of people can expect to benefit from the renewed Home Ownership Scheme. Whoopee for you if you draw a winning ticket, but it doesn't come free. Your taxes pay for it.
And all this is Donald's fault? It's his personal failure? Come on.