Leung's housing policies won't bring down prices

Albert Cheng doubts the measures will actually improve Hongkongers' livelihoods and may in fact end up benefiting the developers instead

PUBLISHED : Friday, 07 September, 2012, 12:00am
UPDATED : Friday, 07 September, 2012, 2:25am


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Since taking office in July, Chief Executive Leung Chun-ying has been plagued by scandals involving either him or his senior officials. He was found to have illegal building works at his Peak home while calling for an end to illegal structures everywhere else. Then the newly appointed secretary for development, Paul Chan Mo-po, and his wife were found to have owned illegally subdivided flats. Chan's integrity has been called into question, yet the government has no intention of resolving the issue; instead, it is hoping the problem will fade away.

For all that has happened, Leung still refuses to admit fault or reflect on his mistakes. Instead, he blew his own trumpet with an article claiming that he and his team have engaged in real work and implemented effective measures to improve people's livelihoods. But that's not true.

It's apparent that Leung won the chief executive election because he had for years used the media to promote his policy ideas for land and housing. The public was misled into believing that, once in office, Leung would implement measures to bring down property prices and resolve the perennial housing problem.

But instead of tackling the problem, he and his team have been evasive on how to proceed on land and housing issues. He said yesterday that the government would roll out the so-called "Hong Kong property for Hong Kong people" scheme next year. But for now it only covers two sites.

And since Leung took office, local property prices have seen a rebound instead of dipping or stabilising.

After Secretary for Transport and Housing Anthony Cheung Bing-leung introduced the first measure to ease sale restrictions for government-subsidised Home Ownership Scheme flats, the prices of these units, and public housing flats, immediately shot up. The government measure has inadvertently created a chain reaction that has also pumped up prices in the private sector and reignited interest in speculative activity.

According to market data, since Leung took office, local property prices have risen and market analysts are predicting a continuing rise. Meanwhile, a recent survey by Chinese University showed that 90 per cent of respondents believe the current property prices are unreasonably high and nearly 30 per cent believe prices will continue to rise in the coming year. In view of this, the Leung administration has no choice but to tackle the problem head-on. Leung announced a series of short- and medium-term measures last week in a bid to cool the overheated market. The premise of the 10 measures is to increase the supply of affordable housing units and land for housing. They seem to be reasonable measures, based on the principle of supply and demand. But it's not that simple.

Look closely at these measures and you will realise they are no more than window-dressing. Some may well have the opposite effect, bringing benefits to property developers, further reinforcing their already powerful market position.

In other words, they are simply tricks which Leung hopes will fool the public into believing that the market will actually stabilise as a result.

First, the short-term measures include putting on sale the remaining 830 HOS flats and 1,000 units under the My Home Purchase Plan, which allows tenants to buy the flat they rent, as well as speeding up the supply of several thousand units in the private sector and the supply of land for private housing development by the end of the year.

The medium-term measures include building some 2,700 more HOS and public units, allocating more land for public and private housing development in the near future and reviewing the existing land policy.

To be honest, the measures do not actually increase the supply of flats by much. The so-called measure to speed up the supply of several thousand private flats is only a drop in the ocean and will do little to satisfy demand or cool the market.

Selling the My Home Purchase scheme flats at discounted prices is a good idea. But on what prices will the discount be based? With the current red-hot property market, the base prices are so high that, even with discounts, buyers might still find them unaffordable.

The only feasible measure is converting 36 lots of government and community land for residential development to build nearly 12,000 public and private units. But it's important to strike a balance to ensure that a good proportion is for public flats - otherwise, it will be a veiled attempt to transfer benefits to property developers.

All these measures may only create a better environment for developers, who will continue to build luxury units rather than small and medium-sized flats for the public. Leung has no intention to rein in prices. All he represents is another form of property hegemony.

Albert Cheng King-hon is a political commentator. taipan@albertcheng.hk