The ViewHere’s where we can find the land to help solve the housing crisis
‘In the long term, government cannot rely solely on land conversion in the New Territories to meet housing demand (and other uses)’
Property prices in Hong Kong have again scaled new heights, demonstrating conclusively that regulatory constraints do not work. The scale of the shortage can be surmised by the gap in cumulative family formation numbers and new housing units completed over the past 20 years.
The cumulative number of marriages in Hong Kong from 1986-2016 was 1.75 million. Over the same period, the cumulative number of new domestic housing units built was 1.57 million. Assuming demolished units amounted to about 10 per cent of the new supply, then the net increase was only 1.41 million units.
Clearing the backlog of housing demand and meeting new demand will be a major priority for the incoming chief executive. It will require a fresh understanding of the complex causes of the persistent shortages seen over the past three decades.
The main reason for our land and housing shortages has been our failure to grasp the full impact of mainland China’s opening and global economic integration on Hong Kong
This is too difficult and complex a problem to blame on any single factor: former chief executive Donald Tsang Yam-kuen for failing to provide more land and housing units, or greedy property developers for withholding land and housing supply, or government policy to maximise land revenues, or crony capitalism and plutocracy, and some are downright wrong-headed explanations.
The main reason for our land and housing shortages has been our failure to grasp the full impact of mainland China’s opening and global economic integration on Hong Kong: it has created enormous prosperity that has fuelled the demand for housing. As property prices escalated, it also created a huge disparity in propertied wealth between the “haves” and “have-nots” to foment a huge political divide and dissent.
Our failure to anticipate the growth in demand has blinded us to the need to increase our land supply aggressively. Most major cities in the world have had a similar experience.
Regulatory restrictions have also not helped. Consider the three most important sources of land supply: land reclamation, urban renewal and conversion of New Territories land – both green and brown sites.
The first two sources of land supply have been unimportant for quite some time for various reasons. So increasingly, new land has had to be found from the conversion of New Territories land. But this process has also become very protracted.