• Tue
  • Sep 16, 2014
  • Updated: 2:18pm
Monitor
PUBLISHED : Thursday, 31 October, 2013, 2:52am
UPDATED : Thursday, 31 October, 2013, 11:49am

Just enforcing the rules could end Hong Kong's housing 'shortage'

Without knowing it, Jake's View and Monitor have been thinking along convergent lines.

We started out in different places, and followed separate paths. But we ended up by coming to much the same conclusion.

We have all been told so often now that Hong Kong is suffering an acute housing shortage, there is a risk we might come to accept it as fact.

After all, we've all read the stories about the tens of thousands of unfortunates forced to live in cage homes and subdivided cubicles. And we have been told endlessly that the typical Hong Kong flat now costs more than 13 times the median household's annual income, shutting young families irrevocably out of the market. So it seems obvious that there must be a desperate shortage of housing.

Anecdotes of public housing tenants exploiting the system abound

But, the more you examine the official data on Hong Kong's housing market, the harder it becomes to find this dreadful shortage.

Bear with me for a bit here; we're going to have to look at some numbers.

According to the government, Hong Kong has about 2.6 million homes. Most of those - 56 per cent - are privately owned. Some 29 per cent are public rental flats, and the remaining 15 per cent have been sold through government-subsidised schemes.

Fine, that's our stock of housing. Now let's look at where Hong Kong households live.

Again according to the government, the city has about 2.4 million households (I'm rounding the figures, because the different government sources don't quite agree).

The first thing to notice here is that Hong Kong has about 200,000 more homes than households, which implies we actually have a housing surplus.

Digging deeper, we unearth more curiosities.

Of those 2.4 million households, 52 per cent own the homes they live in, whether they bought in the private market or from the government.

Some 32 per cent rent from the government, and the rest - 16 per cent of the total or 380,000 families - rent from private landlords.

Now let's make a few assumptions. If we forget for the moment about vacant flats held by absentee owners, and assume that all the private landlords in Hong Kong live in homes that they own themselves, bought in the private sector, that means on average each private sector owner-occupier must own 1.7 flats.

Even if we allow households who own government-subsidised flats to own second properties in the private sector, on average each owner-occupier in the territory - that's 52 per cent of all households, remember - would still own 1.5 flats.

To put that another way, of all the families who own their own homes, half own another flat too.

This sounds unfeasibly high.

As a result, it seems highly likely that a significant proportion of public housing tenants also own flats in the private sector. Some continue to live in their government flat - as Jake points out, they are relatively spacious - while renting out the flat they bought. Others move into their private homes and sublet their public rental flat. All are breaking the rules.

Unfortunately, it's impossible to say how many of these illicit tenants there might be. But anecdotes of public housing tenants exploiting the weaknesses of the system abound.

"It is no secret how many BMWs and Mercedes you can see parked outside public housing estates," remarks one property financier.

"If the government actually enforced the rules governing ongoing qualification for public housing, there would be a significant reduction from one source of housing demand."

If just 3.5 per cent of public housing tenants were breaking the rules in this way, a crackdown could free up enough public rental flats to house all the families currently living in cubicle homes, roof-top shanties and other substandard accommodation.

If as many as 10 per cent were illicitly renting public flats while owning private sector properties, enforcing the rules could free enough public sector rental flats to clear the government's waiting list entirely.

If the government were also to jack up the rates on private sector properties in order to increase the cost of carry for owners of vacant flats, while offering a rebate to owner-occupiers, Hong Kong's much-publicised housing shortage could be ended in short order.

None of it is likely to happen. There will be no clampdown on rule-breaking public housing tenants. The relatively wealthy will continue to abuse the system, while the relatively poor will continue to pay sky-high rents for substandard private housing.

And thousands upon thousands of flats will continue to sit empty. All of which leaves Hong Kong in the bizarre position of suffering a housing shortage, while actually having more than enough homes to house its entire population.

tom.holland@scmp.com

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13

This article is now closed to comments

lamlm38
Why not house the old and "not so useful" folks together with the helps up north in Shenzen since HK is part of PRC.. that will free up a lot of space and it's spacious for them to exercise rather than living in our cramped flats :)
joshuasteimle
Getting government completely out of the equation and allowing a free market to function would also solve the problem. But that is perhaps the most unrealistic possibility of all since the wealthy appreciate having control and the middle class and poor have been duped by the wealthy into believing free markets would hurt them.
don67
Living conditions for the poor being as bad as they are now, surely even our weak government has has the political capital to enforce public housing rules so that the real needy can get a flat. It should also review rules which currently allow wealthy public housing tenants to stay as long as they pay 2-3 times the standard rent (which is of course still WAY below market rates). The government is saying that 60% of upcoming housing supply will be public flats. One must ask if the government does not change the rules to start evicting wealthy existing tenants (to start "recycling" the flats), how much land will/can Hong Kong need to dedicate to building public flats in the future? Both the government and existing tenants must change their mentality toward public flats. They must be seen for what they were intended for - temporary accommodation for our city's most needy. "Temporary" meaning they must be vacated when a tenant's economic condition improves to a point where they can afford to buy/rent privately. In this sense they should be seen as similar to unemployment benefits, you cease to qualify when you no longer meet the criteria. As of now, most public housing tenants will tell you that once they are allocated a flat, they have a God given right to stay there permanently regardless of future changes in their financial status. This attitude is both unfair to the genuine needy still waiting for a flat and unsustainable for Hong Kong as a whole.
pragmatist
Wake up Hong Kong before it is too late!!
I read somewhere before that no place has entitlement to prosperity and love of its people (and foreigners)...
tubbataha
That all seems to make good sense of the situation, and again shows there is no need to be considering houisng development in the the country parks or any other green site. If property as opposed to housing is needed for investment or laundry or bubble purposes surely the finance industry can create a suitable derivative 'product' to meet that need in a virtual way that keeps all the damage isolated in the tertiary economy.
mercedes2233
What is the photo about?
captam
It's an advertisement for Lego bricks and should have been in the Classified section.
johnyuan
captam,
.
I beg your pardon. It is the mindless use of Lego by Hong Kong government and property developers.
.
When the safety net is down showing all those 'bay windows', I can anticipate a headache in looking at them. At least it was my experience when I took my first visit in Shantin more than a decade ago. I am a human not a bee. I still strongly object to the inhuman density wrought by Hong Kong.
donniemcm
Well that stress the fact that Maybe a tax or at least a cross check in a HK individual must be done.
I noticed that the government have all the datas that he needs (number of flats by a HKID, income, etc.) but they never cross check it.
I mean you buy a flat (or more) with your HKID and your public housing flat is tied to it too.
How difficult is it to screen those.
Also talking about those who buy flats and leave it empty for investment purpose, because they don't live in HK, or they have too much money to invest. Well here also a screening on how many property an individual owns, how many he rents out and how many stay empty.
There is a strong and serious need of such kind of cross checking and screening department.
johnyuan
JVDK is on the wrong track about housing shortage. I have a few postings on that.
.
TH is on the wrong track too. If there is truly a housing shortage in present Hong Kong, discovering public housing tenants breaking rules by owning and/or renting out flats still will not resolve housing shortage. Only vacating these rule-breaking tenants by jailing them would create temporary some flats for those on the waiting list. There might be a jail shortage.
.
Normally the status of landlords of our existing housing stock is not important in the search for housing; affordable or not. Nevertheless, TH’s discovery would result in less number of public housing to be built when the law-breaking tenants are being forced out. And the housing supply will tip the scale towards more privately developed housing. The sum total for housing nned remains the same. Here the affordability may or not be an issue depending how greedy the developers will be.
.
TH’s speculation on rule violation discovery requires investigation by authority with its result incorporated into its housing policy. Yes, numbers never been more important and should be made public. Let the public keep the government from colluding with vest interests.
.
Just enforcing the rule could end the 'shortage' of housing in Hong Kong not.

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