Hong Kong must build housing for people, not just investors
Stephen Vines says home ownership should be the basis of the good life
It is becoming increasingly clear that while the government has something approaching a property policy, it has very little by way of a housing policy.
Controversy reigns over the latest bout of property market intervention, which is designed to curb price rises. However, there is a paucity of measures to improve Hong Kong's vastly inadequate housing. Most people live in homes that remain barely fit for purpose; the bulk of which are small and poorly built.
The Hong Kong property market is simply not providing homes for people who need them, but has become a repository for savings and investment. Although the latest government intervention might produce some price easing, home ownership remains beyond the wildest dreams of the average citizen. Yet, a large home-owning community underpins civic responsibility and has social benefits.
Many other societies have taken bold steps to expand home ownership. Hong Kong has been notable not just for its timid steps but by the way they tend to be reversed. Thus, we had the Home Ownership Scheme, launched in the 1970s, then discontinued and now back in force creating a modest number of homes. Then there was the Tenants Purchase Scheme for those in public housing. This, too, was discontinued and, in 2004, the government started phasing out the Home Assistance Loan Scheme, offering interest-free loans to low-income families.
Back in 2005, Joseph Yam Chi-kwong, the then head of the Monetary Authority, shrewdly observed one reason for government inaction: "Whether or not government intervention is desirable in a particular case is always debatable. It is tempting, particularly when bureaucrats do not wish to take on responsibilities, to argue against intervention."
Meanwhile, an unholy alliance of highly influential property developers and free market ideologues have successfully combined to discourage government attempts to widen the net of home ownership. The developers, of course, are primarily interested in making property as expensive as possible, while free market ideologues routinely criticise any government intervention.
There are few more ardent advocates of free market ideology than former British prime minister Margaret Thatcher, yet she went on a mission to intervene in the housing market to a massive extent by selling off public housing to tenants at competitive prices. Her policy was wildly popular.
In Hong Kong, the public sector houses almost half the population. Most of the stock is pretty miserable. Yet there is little doubt that many residents would leap at the chance to get a foot on the property ladder and, like other people who own their own homes, they would be sure to make improvements.
Why won't the government embark on a Thatcher-style programme of selling off its housing stock and possibly using the money raised to create other forms of public housing?
Partly, this is a problem of mindset, especially in a government run by someone who has spent his career in the property market and believes that prices are what matters.
Secondly, the influence of the developers and others, who have a vested interest in prices remaining high, cannot be discounted.
As ever, the powerful people who run Hong Kong are shortsighted, but they might like to remember why public housing was initiated in the 1950s. On the one hand, it was a response to the tragedies that arose from shanty town housing while, on the other, although this was never publicly stated, cheap housing was a prerequisite for keeping wages down.
Now, new social priorities have arisen and they need to be addressed.
