How Hong Kong’s housing crisis has fuelled uproar over Teresa Cheng’s illegal structures
The controversy over our justice minister, Teresa Cheng Yeuk-wah, having illegal structures at her homes may have sparked lots of strong comments from both the public and opposition legislators. Many angrily commented that Cheng should be punished and the illegal structures taken down.
I feel that the reason behind the acrimony is not so much the unauthorised structures in Cheng’s homes, but the fact that many Hongkongers do not own large properties and multiple homes like she does. In fact, the home ownership rate in Hong Kong is about 50 per cent and the average flat size about 495 sq ft. If most Hongkongers could afford such large properties; they would themselves probably have carried out such unauthorised modifications. A lynch mob mentality, demanding that Cheng apologise and be punished, isn’t going to solve our fundamental housing crisis.
The wider issue we should address is that many people in high office in Hong Kong own multiple properties and have a vested interest in keeping property prices high. The government often quotes low interest rates, and strong demand growth from a free-market driven economy has contributed to rising prices.
Land is tendered in an open market that goes to the highest bidder, and winning developers then build more costly homes. Those who can afford these homes are either very wealthy existing homeowners, or those benefiting from developers that only offer financing to existing homeowners.
This process causes further supply increases, to only fulfil the investment demands of the wealthy, rather than the genuine housing needs of many. Wealthy buyers continue to snap up any new releases, as seen in the latest St Barths complex where over 1,000 buyers vied for 108 units, selling at exorbitant prices; we have a phenomenon whereby supply increases aren’t helping non-homeowners; as they can’t afford to purchase. Increasing land supply or auctions doesn’t solve our housing crisis if prices continue to rise – keeping out new buyers.
To genuinely solve our housing crisis, the government must move away from a high land price policy; collect tax revenues from yearly capital gains or wealth tax on landlords who own more than one property; implement property inheritance taxes; and, impose a temporary ban on foreign investment demand.
Like the Housing and Development Board in Singapore, for social stability, the Hong Kong government should also be involved in building public housing, bring in foreign labour specifically for this and use 5 per cent of our country parks solely for locals who do not own homes yet.
Bernard E.S. Lee, Tsuen Wan