• Mon
  • Jul 14, 2014
  • Updated: 3:11pm
PUBLISHED : Thursday, 06 February, 2014, 6:31pm
UPDATED : Friday, 07 February, 2014, 3:10am

CY Leung's housing policies have made situation worse

Albert Cheng says the government should stop interfering in the market and address the real issue by building more affordable homes


Ir. Albert Cheng is the founder of Digital Broadcasting Corporation Hong Kong Limited, a current affairs commentator and columnist. He was formerly a direct elected Hong Kong SAR Legislative Councillor. Mr Cheng was voted by Time Magazine in 1997 as one of "the 25 most influential people in new Hong Kong" and selected by Business Week in 1998 as one of "the 50 stars of Asia".  

Chief Executive Leung Chun-ying beat his rival in the popularity race and hence won the support of Beijing to take the top job in Hong Kong, mainly by blowing his own trumpet over his land and housing policies.

He also managed to fool a lot of people, including intellectuals and the professional elite, into believing he had the will and the ability to resolve the two thorny issues at the heart of our deep-rooted social conflicts and widening wealth gap.

But as a famous saying goes: "You can fool all of the people some of the time, and some of the people all of the time, but you can't fool all of the people all of the time."

The truth will out. For more than 18 months, since Leung came to power, housing problems have worsened rather than improved. It's still extremely difficult for Hongkongers to buy their own homes because of the unrealistically high property prices and the adverse consequences of the government's tough measures to cool the market.

It remains a pipe dream for most Hongkongers to realise their most basic housing needs because of the severe land shortage.

Leung has in fact not addressed our perennial housing problems, just like his predecessor, whom he vehemently criticised for surrendering to the rich and powerful property tycoons and allowing government-business collusion to fester, eating away at our core values.

Leung's first favourable policy benefiting property tycoons was to allow 5,000 "white form" applicants for Home Ownership Scheme flats per year to buy these flats in the second-hand market without paying a land premium. White-form applicants are prospective buyers living in private flats and do not receive any housing subsidy.

This relaxation immediately pushed up demand well beyond supply, especially due to a surge of "green form" applicants - lower-income people living in public housing - snatching up second-hand HOS flats in anticipation of rising demand. Eventually, prices of second-hand HOS units rose sharply, at the same time boosting the prices of private housing at the lower end of the market.

Unscrupulous property developers of luxury apartments immediately took advantage and raised prices further.

As a result, our housing prices are still among the most expensive in the world. Further, Leung's government extended the time allowed for developers to pre-sell incomplete units. This measure, ostensibly to increase supply, actually gives developers ample time to offload their properties to reap big profits.

The measures to supposedly cool the market are, in fact, interfering executive measures that show a total disregard for the normal market order.

They have not only led to a stagnation of the private and second-hand markets, they have also created additional obstacles for genuine homebuyers looking to improve their living environment.

In his policy address, Leung said he was determined to help Hongkongers live in a better environment. Yet he has been doing the opposite.

In reality, even if property prices came down, they would still be among the most expensive in the world, according to the latest survey of current global housing prices by The Economist.

This year's policy address seemed to lay out a long-term strategy for public housing, but the devil is in the details.

The whole point of the exercise seems to be for the government to provide developers with ample land to build private units in the next five to 10 years.

In the next five years, there will be about 150 plots of land converted for residential purposes - sufficient to build around 210,000 public and private units.

These plots have to be developed before construction work can begin and the government will have to pay for the development of infrastructure.

In other words, public funds are being used to subsidise private residential developments.

To maximise their profits, it's almost certain that developers will build even bigger residential blocks that have a negative impact on our overall living environment.

The proliferation of high-rise buildings will increase our living density and in turn worsen the problems associated with an urban heat island phenomenon.

We need to solve our housing problem. While the government has no duty to assist Hongkongers in buying their homes, it should not shirk its responsibility to resolve our housing shortage.

The only option is to build lots of affordable public housing units.

The government cannot continue to turn a blind eye to the fact that most Hongkongers are being enslaved to work their entire lives to save up for a roof over their heads.

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


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This article is now closed to comments

Albert says that housing is not affordable to most hong Kongers. Well that statement is false. Roughly 50% of families live in government housing which they have for life at the lowest monthly rental in the developed world. Roughly 35% of people own their own home. This leaves 15% of people renting in the private market. So they should say housing is not very affordable to the 15% that rent in the private market.
Housing has pretty much stayed at the same price for the last 12 months. The government has stopped mainland Chinese buying housing (they are now buying London / Vancouver).
The whole government rental makes private houses only appear expensive. If you remove the bottom 50% of houses from the study then the top 30% will appear expensive.
A value of $1.5 million HK should be given to each government house in Hong Kong. The comparison should then be redone. You will then find Hong Kong is just average home prices.
To realise the dreams of more Hong Kongers buying a home it would be good to build more affordable public housing units. However, I believe this is not the only solution. To bring about a reduction on high property prices why doesn't the government introduce a capital gains tax to those owners that own multiple properties? To start with it could be a mild tax to test market reaction and then gradually ramped up to a level where it does have the desired effect of property price reduction.
Where I believe CY Leung's housing policies have made the situation worse is with the introduction of the double stamp duty. This has led to a large decrease in the volume of property transactions. Apart from the adverse effect this decrease has, particularly on those people who make a living from property transactions such as agents and decorators, this makes it very difficult for those owners wanting to sell who, because of changing family needs, simply want to move their home from one district to another. To help these owners, why doesn't the government get all home owners to declare their principal residence and, once declared, permit the owners to sell their homes without paying the double stamp duty? This should then not only lead to an increase in the number of property transactions but also make it easier for those owners who simply want to change homes because of changing family needs (such as helping raise grandchildren, children changing schools, downsizing etc)
To Albert Cheng:
It is difficult to follow your train of thought anymore nowadays. You were an iconic hero for the underdogs in Hong Kong. You seem have lost that sense of fighting spirit which is correct. I only hope it is all due to the advancement of old age that needs to slow down and take a rest perhaps.
John Yuan
CY's housing policies have their faults but at least he is seen to be doing nothing. The way I see it, the author wants us to revert to his buddy, Bowtie Tsang's policies. His coddling of property tycoons was plain for everyone to see. House prices took an astronimical leap in his term as CE mainly due to inaction. It is debatable as to whether housing prices would have surged even more if CY had done nothing. Yes, it always seems right to say 'let the market correct itself. However, should the day of reckoning arrive likely through higher interest rates housing prices will plummet and many owners will have their hands burnt.
Extending the time for developers to pre-sell incomplete flats - buying and flipping flats pre-settlement is basically a way to do leveraged speculation in properties (without even having to take out a mortgage). That does nothing to help to dampen prices - quite the contrary.
This guy is correct that CY's policies have increased housing demand and consequentially prices.
Um, is this guy schizophrenic? He blames the government for interfering with the market and asks for more public housing?? Public housing is as market oriented as bread production was in Soviet union. Last time I read something from this author he wanted to protect Cathay Pacific from low cost competition. Obviously a man without moral or principles but with a network that needs to be nurtured.
So much for his credentials as a former directly elected Hong Kong SAR Legislative Councillor. This columnist wants to have it both ways whether the existing policy under Leung Chun-Ying was implemented or not.
It is a known fact that the previous administration's inaction on the land policy due to poor Government planning has mostly given rise to the housing unaffordability of current times (whilst under this columnist's watch on Legco from August 2004 up until 2008 on the public purse) .
Where was your vocal voice during the previous administration to address future housing supply? Now Rome is burning as a result. Legislative Councillors (and former Legislative Councillors) in Hong Kong and their constant pointless posturing have a lot to answer to the public in terms of their failure to consider the public interest for which the middle class pay the price. No wonder John Tsang (a legacy of the previous administration too) dismissively reduces the middle class to those who drink coffee and watch French movies.
Well, at least we're seeing some initiatives. Not much was being done when your pal Donald was in office. Care to write an article about the harm done by the inaction of those years?


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