Thanks, but no thanks, Mr Wang

PUBLISHED : Tuesday, 21 June, 2011, 12:00am
UPDATED : Tuesday, 21 June, 2011, 12:00am


The government is under growing pressure to resume building Home Ownership Scheme flats after Beijing's Hong Kong affairs chief warned openly that the shortage of housing for people in need could turn into a political problem.

SCMP, June 19

Let us consider the career of Wang Guangya, director of the Hong Kong and Macau Affairs Office, a man who believes that Macau's record of housing its poor is better than Hong Kong's when half of our people live in public housing and Macau did not even think of a public housing programme until four years ago.Mr Wang was a student in Britain for three years, joined the Ministry of Foreign Affairs as a translator and then rose rapidly through the ministry, spending a considerable portion of his career in China's delegation to the United Nations. He is, obviously, a career diplomat.

But I do not see anything in his career record to indicate that he has previously concerned himself with housing needs or housing policies, or anything to do with housing. Nor do I see any sign of a previous close association with Hong Kong affairs, housing or otherwise.

Yet on his first official visit since taking office, he breezily delivers himself of a sweeping pronouncement on the condition of our housing market and informs us that we must set things straight while not bothering to tell us what he considers the exact nature of the problem to be or how he would solve it.

Our Donald has thus little option but to resort to the most showy measure he can take, which is to start up a programme of subsidised-sale flats again. Anything else, effective or not, might be seen as paying too little attention to the word from on high. This would constitute disrespect.

It is ironic, however, that the proclamation had a Macau angle as this solution closely resembles the mainstay of the Macau economy. It's a gamble. Put down your tax dollar and pick a ticket. If you win, you get a subsidised-sale flat. If you lose, well, console yourself that you helped pay for a social programme approved by the highest authorities in Beijing.

Personally, I prefer the Macau variant. The odds of winning are much more favourable no matter what game or machine you play.

The old Home Ownership Scheme at its height averaged about 15,000 new public-sale flats a year. This amounts to about six-tenths of 1 per cent of the present number of households in Hong Kong, and remember that we are talking of completions per year. As I say, Macau gives you better odds of a win.

All this assumes that a new programme could achieve a similar 15,000 flats a year consistently, which is highly unlikely. It would also constitute a very delayed solution to an immediate problem. To get a new programme of this sort up and running at target delivery levels would take years, not months.

Given the way these things work, it is also very likely that this new housing supply would come on the market just as prices begin to crumble of their own accord. The result would be a property market correction turned into another property crash. I'm not being cynical about this. It is the record of past housing interventions.

Our housing problem is in any case not one of housing supply. With a few exceptions at the fringes of society, Hong Kong people all have roofs over their heads. Most of us would undoubtedly like bigger flats but we don't force people into squatter huts any longer.

The problem is rather one of price, and the biggest single reason that housing prices have gone so far up is that interest rates have been way down for an extended period. It is not our doing and there is nothing we can about it. Breaking the peg to the US dollar would not solve the problem although it would destabilise our economy.

The only other thing we might do is prohibit mainland money from buying property in Hong Kong but, even if we could block the flow of money this way, and this is highly doubtful, it would only force a correction at the luxury end of the market, while it is the poor with whom Mr Wang professes himself concerned.

There is really very little that government can do to lop the top off a property price cycle that is already in place, at least not without inflicting as much damage as is repaired.

If Mr Wang is worried about political problems he would probably do better not to make pronouncements on matters that many people in Hong Kong understand much better than he does.