• Fri
  • Oct 17, 2014
  • Updated: 2:57am

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


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This article is now closed to comments

good analysis
I agree, the government is mental in building massive number of new properties when HK already has too many. They need to stop the scheme immediately that only helps developers.
Simple high-school economics will tell you that an increased supply will have a tendency to lower the price. If there is 'reckless building' now, it will make the inevitable crash come sooner rather than later, which is probably a good thing.
The fact that the government didn't release the land in Tai Po suggests that they don't want the prices of property to fall.
With the birth rate below the replacement rate east Asia, each generation more apartments need to be demolished than built. When that happens the entire property investment market will start to look a bit like a ponzi scheme.
As a Real Estate Agent, I can confirm that there is not a shortage of housing in Hong Kong, there are plenty of empty apartments bought for investments and there are many properties that are empty for either years or at least a year if the Landlord can not get the rental he/she wants, they will not rent it out.
Even with the very big developers, who offer their entire developments for rental, they only release a few at a time to give the feeling of demand, but in actual fact there is plenty available for rental... It's just all about the Landlord getting the price/profit
they want.
The figures are good to illustrate Supply and Demand of housing in hk. However, even the government, i.e. the housing authority, published the figures, how could the government affect the housing? This proved that the price is influenced heavily by the property agents and investors, which makes the government can't control the sky-high property price.
Therefore, under the DSD, the government tried to intervene on the market and freeze the transaction, even it was blamed to influence the free market.
From the figures, I agree there is no housing shortage. BUT, I totally praised the government action on the DSD and build more housing that attempt to freeze and lower the property price.
If not, the public would seriously suffer from the upsurged housing cost.
Good observation. The government should make it costly for property investors and cheap for property dwellers.
Well said!
Completely agree. Too bad the government doesn't have the honesty or courage to tell the truth to the community in a manner as clear and straight forward as Mr. van Marle has.


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