Hongkongers see homeownership as an investment. This has to stop
Regina Ip says Hong Kong must address the four factors of supply, demand, liquidity and expectations that are causing the lack of affordable housing in the city. The task force on land supply is moving in the right direction by exploring all possibilities
Hong Kong’s land and housing shortage has reached such crisis proportions that shortly after she assumed office, Chief Executive Carrie Lam Cheng Yuet-ngor set up a task force on land supply to look into all possible options.
The task force left no stone unturned. Seven months later, it announced that it has identified over 10 possibilities, from reclamation and the use of some country park land and/or agricultural land in the New Territories, to using restored landfills, the River Trade Terminal in Tuen Mun, and the Kwai Tsing container terminal.
Adoption of any of the options involves tough decisions, but none has provoked as strong emotions and bitter controversies as calls to resume the “golf land” – 172 hectares in Fanling being used as three 18-hole golf courses.
In a dramatic move to signify their strong revulsion at the setting aside of such a massive plot of land for the enjoyment of an elite sport by the privileged few, various political groups purporting to represent the underdog staged a raid on the Hong Kong Golf Club last month. Demonstrators urged the government to resume the golf courses outright, to release land for public housing.
Naturally, much can be said in defence of the golf courses, given Hong Kong’s long-standing policy of granting land to sports clubs by way of “private recreational lease” to enable them to provide sports facilities and promote sport development at a nominal land price. Clubs such as the Hong Kong Jockey Club and the Hong Kong Golf Club have invested heavily in maintaining world-class sports facilities, hosted prestigious international sporting events and contributed to Hong Kong’s reputation as a city with diverse sports and recreational facilities.
Moreover, demolition of the Fanling golf courses would risk destroying over 30,000 trees, hundreds of century-old graves of indigenous residents, historic buildings and a habitat for rare flora and fauna – the very same local treasures nativist groups have fought to preserve. Leaving aside the obvious contradictions and many deliberate factual distortions, the mounting furore over the golf land does serve as a powerful metaphor for the bitterness that has built up against the rich because of land shortages and the uneven distribution of land.
The anger against the golf club has to be seen against disturbing facts which speak for themselves. The waiting time for public housing applicants has lengthened to 4.7 years, against the government’s pledge of three. The pool of applicants has grown to over 280,000, including many young, single people. On top of that, the government acknowledges that up to 123,000 families live in poor conditions – in temporary structures, non-residential buildings, sharing with other households or in subdivided cubicles at high rent.
A combination of factors has given rise to the current impasse – supply, demand, liquidity and expectations. In 2002, in the wake of the property market meltdown, the government cut back the production of public rental housing and halted the construction of subsidised housing under the Home Ownership Scheme (HOS). Land supply and reclamation projects drastically slowed down. The government only resumed land sales by public auction and the construction of HOS flats almost a decade later, by which time the prolonged neglect of supply has created a serous bottleneck.
Demand has been stimulated by economic growth, and genuine demand for accommodation due to population increases and new households. In the peculiar situation of Hong Kong being mainland China’s top destination for outward investment, massive capital inflows in the past decade have created domestic asset bubbles, especially in housing. The apparently unstoppable rise in home prices has fuelled demand for homes as investment.
People have forgotten the dog days of property downturns from 1998 to the second quarter of 2003, when home prices plunged by 65 per cent. Homebuyers have been lulled by the continuous climb in prices into seeing nothing but upside. Many young people see our society as divided into the propertied class and the non-propertied class. They hate the rich for becoming wealthy by hoarding land and housing. And they hate the government for denying them a chance to get a decent home and become rich.
To resolve the current woes, the government needs not just a couple of measures to curb demand, but a comprehensive package to forcefully demonstrate its determination to get the housing market back on an even keel. The government needs to address all four factors – supply, demand, liquidity and expectations. The task force on land supply is moving in the right direction by exploring all possibilities.
To augment supply, it should also look at the possibility of relocating prisons, redeveloping antiquated housing schemes for civil servants, and injecting more funds into the Urban Renewal Authority so it can get on with urban redevelopment without hurting sitting occupiers or selling properties at exorbitant prices. The government should think hard about how to make the best use of its Land Fund, which is managed by the Hong Kong Monetary Authority, and its relatively newer “future fund” to help the people resolve their housing problem.
To curb ever-soaring home prices, the government also needs to address expectations that the market could only go up. Its ambitious public housing programmes were launched in the 1970s with a view to meeting basic needs, not to encourage homeownership as investment. The government should return to the basics, and refrain from encouraging homeownership when prices are already sky high. Investment decisions should be left to individuals, weighing up rates of return and risk. If the government persists in encouraging homeownership in an increasingly risky market, it could end up facing calls for a bailout when the market crashes – and that has happened before.
Regina Ip Lau Suk-yee is a lawmaker and chairwoman of the New People’s Party. She is a member of the Hong Kong Golf Club