No housing shortage in Hong Kong, just not enough affordable flats

PUBLISHED : Saturday, 31 May, 2014, 4:43am
UPDATED : Saturday, 31 May, 2014, 4:43am

Rarely a day passes without a mention of "Hong Kong's housing shortage".

It is used to justify new developments left, right and centre, including in green belts, a new town near Sunny Bay on Lantau, and even in country parks.

I have never been convinced that there is a housing shortage in Hong Kong, and the more I read about it, the less I am convinced that it exists. House prices are rising, which would normally be a sign of high demand and low supply; however, of many indicators, this is the only one that shows a possible shortage. There are many other indicators that show otherwise.

According to the Housing Authority, there were 2.389 million households in Hong Kong by the end of 2012. In March 2013, there were 2.616 million housing units available for them, or almost 1.1 unit per household. Not something I can call a shortage, rather a surplus.

Recently the government withdrew from tender two sites in Tai Po, quoting too low bids from the developers, which did not meet the government's reserve price.

In the case of a housing shortage, developers should be scrambling for land to build more, as there is money to be made by selling more units.

In your Property section last July, you reported that real estate agents had complained about lacklustre interest in new housing units. Weak demand from buyers is not supporting the notion of a housing shortage.

And the final, simplest test of all - just walk into a property agent and ask whether they have any homes available. They always have ample choice of units, many empty and waiting for a new occupant. Again a sign of a supply surplus rather than shortage.

This leaves me with just the sky-high prices. With near-zero mortgage interest rates, holding on to an empty unit is cheap, giving little incentive to owners to quickly sell off their vacant units; they can hold on and wait for the right buyer to come along.

So, there is no housing shortage, but there is a shortage of affordable housing, which is a whole different story. Just recklessly building more is not going to solve the problem, it will only make the inevitable crash of currently inflated housing prices far worse.

Wouter van Marle, Tai Po