SCMP Debate: Do you think CY Leung's measures to boost housing supply will be effective?
Housing was the dominant theme of Chief Executive Leung Chun-ying's maiden policy address last month. His plans include rezoning green-belt land, reclamation outside Victoria Harbour and stepping up production of public housing flats after 2018. But the range of measures he announced has drawn criticism, both from those who feel he has done too little and those who say he is taking the wrong options. We speak to developers, planners, academics and property agents about Leung's plans to fight soaring flat prices, build up a land bank and provide more subsidised homes.
Q1 Do you think Leung Chun-ying’s measures to boost land and housing supply will be effective? How can the government convince the public that it is not bowing to pressure from property developers?
Q2 Do you agree with the government’s drive to boost land supply for residential development? Do you think it is too much of a stretch and comes at the expense of air ventilation, sound urban planning and other development needs?
Q3 Do you think the government should impose a vacancy tax on unsold new flats? Do you agree that the government should introduce more residential projects under “Hong Kong property for Hong Kong residents”?
Donald Choi Wun-hing
Managing director, Nan Fung Development
A1 We need to define what is meant by "effective". Land supply and home construction need time to enable quality delivery. No magic bullet can increase supply and solve the problem overnight. Therefore, in the short-term, the proposed measures are obviously not satisfactory if the community has an unrealistic expectation that the problem can evaporate suddenly just because of a policy address. In the mid- to long-term, the policy address confirms the government's goal to increase supply, including long-term new town development in the New Territories, which should be welcome. However, in view of the waiting list of more than 200,000 applicants for subsidised housing, the target of providing at least 100,000 flats over the five years starting from 2018 is insufficient and the government should spend more resources on subsidised housing. Approximately 46 per cent (29 per cent public rental housing, 17 per cent subsidised home ownership) of our population lives in public housing. This ratio can be improved if the government is genuinely keen to assist. More than 80 per cent of Singaporeans live in government flats. The supply solution should not be limited to quantity, but also needs to address quality. We must improve the quality of housing, so people can live with dignity.
A2 A strategy to ensure suitable land is available for residential development is essential. It should also cover land for non-residential developments to improve quality of life and increase economic competitiveness. To enable comprehensive planning, our society must have a common vision of what Hong Kong could become. In terms of land supply, the government's responsibility to its residents is to devise measures to support the realisation of such a vision. A blind, expeditious short-term fix of turning sites with other land uses into residential use regardless of other needs is dangerous. Imagine a community that has insufficient government, institutional and community facilities, with no urban parks and green open spaces and with no suitable local employment opportunities. Housing alone does not build a community. The quality of the neighbourhood is as important, if not more important, than the quantity of homes. Demand for better air ventilation, humane urban planning and sustainable development must not be ignored just to build more homes.
A3 It is dangerous to impose unwarranted restrictions and additional costs to manipulate and distort the private housing market. Hong Kong's competitiveness is underpinned by openness and fairness in its institutions and its free markets. We have a policy of "Hong Kong property for Hong Kong people" in the form of subsidised housing. The government can increase the number of people who can benefit from such programmes by allocating more resources to speed up the delivery of such projects. The government should not send out a damaging parochial protectionist and discriminatory message that Hong Kong does not welcome foreign investors and talent. Ours is a community of immigrants and Hong Kong has benefited from their hard work and resourcefulness. It is important that our society be inclusive.
Peter Cookson Smith
President, the Hong Kong Institute of Planners
A1There are various dimensions to the housing situation that we need to resolve at several levels. A starting point must be the current review of the Long Term Housing Strategy because we need to make plans, which balance the needs of different sectors in the public interest. Decent housing must be provided for "grass-roots" households, but we also need to offer choice to all sectors. This means securing land for new public rental flats, but also encouraging tenants who have the financial capability to purchase Home Ownership Scheme flats or seek private accommodation. I don't think it is a matter of bowing to pressure. One problem is not just a numerical shortage of flats but high land costs, coupled with the exigencies of affordability, which has led to a situation where a large proportion of existing private flats are "shoebox" homes. We need to better equate quantity with quality, to both extend the range of choice and cater for the many households that want to upgrade. As for convincing the public, there are three sides to this. First, new development areas should be planned as sustainable communities with a sense of place, rather than isolated enclaves, paying heed to local concerns and environmental issues. Second, we have to redevelop older public housing estates. Third, we have to facilitate a more focused urban regeneration agenda, working with the community to revitalise older areas and stitching together the city through upgraded and distinctive local environments.
A2 The government's intention to boost land supply is not just geared to residential use but also to creating a strategic land bank. Land supply can only be derived from resumption or reclamation, but both are problematic. For sound urban planning we need to examine means to properly co-ordinate land use. The Town Planning Ordinance was only extended to the New Territories in 1991, but to all intents and purposes land outside designated towns and country parks has come to represent a combination of piecemeal low-rise development and abuse of agricultural land, not helped by the small house policy, which is environmentally damaging and wastes land. Large-scale, but scattered, land acquisition by developers, which makes amalgamation difficult, has limited the ability to co-ordinate coherent patterns of development and led to development in vulnerable areas. One solution might be a partnership with the private sector to induce land exchange but with commensurate restrictions on development outside planned New Development Areas. Raising plot ratios at urban sites and lifting moratoriums need careful examination, and I have doubts as to their advisability. We have to think about the quality of the urban environment, while planning for growth.
A3 I am not convinced a vacancy tax would be either necessary or viable. The fact that the government might consider this could in itself motivate developers to release unsold blocks, although this does not seem to be a major problem. I don't see the need for restrictions on mainland or overseas buyers. They are a small section of the market just as in other cities, and protectionist measures would dent Hong Kong's laissez-faire pretensions.
Dr Lawrence Poon Wing-cheung
Spokesman, Institute of Surveyors’ housing panel, and City University real estate lecturer
A1The chief executive introduced short-, medium- and long-term measures to boost land supply for housing. Some short- to medium-term measures are more certain and effective, such as increasing development density at unleased or unallocated residential sites and approving residential developments at Kam Sheung Road Station and Pat Heung maintenance depot, given they involve mainly government land and are not so controversial. Other measures involve private land, in particular rezoning industrial land, and there are a lot of uncertainties, such as when a revised statutory plan will be approved and whether the owner agrees the land premium for lease modification. For the long-term measures, conflicting interests between stakeholders are the main hurdle. Worse, increasing land supply through reclamation, resumption and rezoning is seen as a means to protect developers' interests at the expense of public interest. To convince the public, the government should demonstrate that it is not afraid of introducing housing polices against the interest of developers.
A2 The government is on the right track in increasing housing land supply through various means to make up the shortfall of the past decade. However, it should use land supply as a means to meet housing need rather than as a tool to regulate prices. Otherwise a lack of land in a property downturn may lead to insufficient housing supply when the market recovers. Similarly, excessive land supply during property booms may lead to oversupply. To avoid market fluctuations, the government should build up more than enough land to meet short-term demand to make timely adjustments to land supply to meet changing needs. Although there is no sign that the housing land supply is overstretched at the expense of other development needs, the government should not overlook the importance of providing sufficient land for other uses. With development projects properly regulated through land lease, planning and other development controls, it is unlikely that housing supply would come at the expense of air ventilation and sound urban planning.
A3 There is a perception that developers withhold the sale of completed flats to limit supply, causing prices to surge. However, according to Transport and Housing Bureau figures, unsold completed flats stood at a peak of 19,000 in December 2006, gradually dropping to a historic low of 4,000 in December last year, about half the level from 2009 to 2011. Instead of withholding sales of completed homes, developers are demanding early consent to sell uncompleted flats to secure profits and capital return as early as possible to finance other projects. Since there is no evidence the price surge is caused by hoarding flats, a vacancy tax on new flats is not justifiable. "Hong Kong property for Hong Kong people" should only apply to land suitable for small to medium-sized flats and the scale should not be excessive, bearing in mind that land-grant conditions that restrict sales of flat to non-residents will have a perpetual effect. Although people can buy such flats cheaper when the market is booming, they may struggle to sell in a downturn with a huge supply of unrestricted flats on sale.
Peter Pun Kwok-shing
Former director of planning
A1 If they are not nullified by counter-actions introduced by various quarters in the community, these measures should be effective in increasing land and, hence, housing supply. Some of these measures will, however, take a long time to materialise. Their real effect will only be seen in the long term. The issue now is what the government can do in the short-term. The relationship between housing supply and price is not always direct in Hong Kong. Therefore, another very obvious issue is whether the supply of more land and, hence, more housing will result in affordable housing. What is "the pressure from property developers"? If this phrase refers to the suggestion that developers are pressuring the government not to build so many subsidised homes, then the fact that the government is adopting these measures is already a clear indication that it is not bowing to this pressure. Continuation of the effort to implement these measures and to modify them to make them more effective, together with the outcomes, should convince rational members of the public.
A2 I agree with the government's drive. Without adequate land for residential development, it is impossible to provide affordable housing (including various types of subsidised housing) and those with lower incomes will suffer. This drive, nevertheless, must be accompanied by tools to prevent housing prices being "artificially" driven up. In order to overcome the problems caused by the deficiency in housing supply in past years and to ensure adequate supply in future, strong measures are needed. From this viewpoint, the boost by the government is not overstretched. Hong Kong must build up an effective land bank. This will not be done at the expense of quality of life. In deciding the use of land, departments will adhere to appropriate laws, principles, standards, guidelines and procedures, such as the Planning Standards and Guidelines, the Air Ventilation Assessment, Town Planning Board Guidelines, practice notes and the principles of involved professions.
A3 The idea of imposing a vacancy tax on unsold new flats is to compel property developers to put all flats onto the market quickly. This is a good intention. Perhaps, another effect is to prevent them from keeping new flats unsold so as to reduce supply in the market and, therefore, to increase flat prices. Very few developers will deliberately delay selling their new flats since most of them usually look for a speedy return on their investment. I therefore have some doubt on the need to impose this tax. On the other hand, real estate properties can be used by the public as "shelters" and as "commodities". This is more so in Hong Kong than most other cities. Effective tools must be adopted to prevent extensive speculation as it may render housing unaffordable to most people. It appears so far that the practice of "Hong Kong property for Hong Kong people" is effective in preventing speculative purchases by outsiders. From this viewpoint, more residential projects of this type should be introduced. On the other hand, we should not go too far. As a world city, we must welcome outsiders, some of whom may like to stay a long time and prefer their own housing. We should not make it impossible for these people to buy flats for their own use.
Founder, Centaline Property Agency
A1 The measures focusing on supply are on the right track and are pragmatic. Their effects will only be felt in three or even five years, and this may fall short of the expectations of those who want to see an immediate effect. The government has tried to reduce demand for flats with the special stamp duty and the buyer's stamp duty launched in October. According to our statistics, it has effectively deterred speculators in general, although there may be isolated cases of investors recouping profits that can offset the tax. With the demand reducing and supply rising, the property market will be cooled down. It is the sentiment of doubt about Leung's policy that may discount the effect. Of course we need to pay attention to the global economy. If it improves, the hot money may not go to the property market but to investments in the real economy.
A2 We have to set priorities for our needs. This is up to the people to decide. Various literature and studies have shown that housing is the top concern of Hong Kong people. But sometimes there is confusion about housing needs and investment needs - many who say they care about housing actually care about how much they can profit from selling the property they own. The government needs to distinguish between the two needs. The new supply of land should satisfy those with a real need - who are, in my view, first-time home buyers. As for other concerns like protecting our ridgeline from being ruined by tall buildings, I would think these are "luxuries" when there are so many people living in the poor conditions of subdivided-flats, having to live in the shadow of fire and building safety risks.
A3 The government initiative "Hong Kong property for Hong Kong residents" is not enough, because most buyers of new homes now are those who earn more than HK$40,000 a month. The initiative should go further to confine the new homes to first-time local home buyers only, and cover more land rather than only the two sites in Kai Tak. I suggest the government set aside half the sites to be sold to developers in future for first-time buyers who are permanent residents. Conditions should be laid down in the land lease to limit resale of these homes to first-time buyers also. This form of subsidy would be more effective than building Home Ownership Scheme flats. The government will inevitably have to charge developers a lower land price because of this sale restriction - which I guess is a 50 per cent discount in land price, and flat prices will be 60 per cent lower than for a full-market project. If the government really thinks that housing is its top priority, the reduction in land revenue should not be seen as a problem. I do not see the urgency for a tax on vacant properties. A tax should be introduced only against a common phenomenon in a society. The vacancy rate of second-hand flats is low (the official figure is 4 per cent). As for new flats, only a couple of developers are slow in selling their new projects, like Chinachem Group and Hang Lung. The mainstream developers usually sell most of their flats before the government issues permits for occupation.
Stanley Wong Yuen-fai
Town Planning Board vice-chairman and chairman of the Housing Authority’s subsidised housing committee
A1 The government has recognised the shortage problem facing us. In the past, officials evaded the issue. Indeed, the solution is no more than increasing supply and it is impossible to achieve balance in the short term. Among the mid-term measures in the policy address, land would come from three major sources: in the northeastern New Territories, in Hung Shui Kiu and in Tung Chung. These amount to hundreds or even thousands of hectares. If the three areas can be developed as planned after proper consultation, I believe the measures will be effective. I worry that people will panic and rush into the market now, even though they don't need a home urgently. The severity of the problem is reflected in the overwhelming responses to two recent subsidised housing projects, the Housing Society's Greenview Villa and the Housing Authority's scheme that allows middle-income people to buy second-hand subsidised homes at a discount. Tens of thousands applied for both, although some may not earn enough to afford the mortgage.
A2 As vice-chairman of the Town Planning Board, I do not feel the land hunt threatens our environment. The board is not a rubber stamp and will serve as a gatekeeper against excessive urban building density. Of its 35 members, only five are government officials, and many members have a professional background in engineering, planning and finance. We have done a lot of hard work in setting building heights in the past few years. And there are examples of the board rejecting government proposals to use community land for housing. Recently, we decided not to adopt officials' idea of rezoning a waterfront site in Ma On Shan, earmarked for community facilities, into housing, as there were concerns that a new high-rise tower would block airflow. We asked the Planning Department to identify alternative sites for housing, and it did. The board will deal with more rezoning proposals soon as the government has plans to change 36 zones of "government, institution or community use" into housing. We will vet them carefully.
A3 A vacancy tax is difficult to implement because it is hard to define whether a flat, especially a second-hand flat, is vacant. Even for new flats, for how long should a flat remain unsold to be taxed? Such a tax would pose a great risk to developers, who are not hoarding many flats - there are only 4,000 unsold flats in the primary market. The tax would not release a large supply of new homes and would not help drive down prices much. I have always doubted "Hong Kong property for Hong Kong residents" would be effective. One reason is it does not forbid leasing to non-locals. Another is that such a stringent measure is no good to Hong Kong as an international city that welcomes foreign investment. There should only be measures against speculators, not foreign purchasers, as not all non-locals are investors. I worry about the growing anti-mainlander sentiment. The "locals-only" measures can quiet the opposition, but is it good for the long term? The government should think twice before launching such measures, and should not do it just because it has no other solutions.