• Sun
  • Dec 21, 2014
  • Updated: 8:34pm
NewsHong Kong
PUBLIC HOUSING

Housing minister Anthony Cheung admits Hong Kong homes are too dear

For the fourth year running, flats in the city are ranked the most unaffordable in the world in a survey

PUBLISHED : Wednesday, 22 January, 2014, 11:45am
UPDATED : Wednesday, 22 January, 2014, 4:25pm
 

Hong Kong’s residential prices and rents have gone beyond levels affordable to average residents, the housing minister has admitted.

Local home prices top a list of 360 cities around the world – in the fourth consecutive year a global survey has ranked Hong Kong No 1 in terms of unaffordable housing.

“Generally speaking, the prices have exceeded what most people can afford,” Secretary for Transport and Housing Professor Anthony Cheung Bing-leung said on Wednesday in response to the study findings, released by US-based consultancy Demographia the day before.

Cheung defended the government’s cooling measures, saying the introduction of extra stamp duties in October 2012 and February last year had helped stabilise prices, but that average household income levels still lagged behind property market rates.

“When even university graduates cannot see the prospect of affording a flat, not even a new Home Ownership Scheme flat, it reflects some structural problems in our society,” he admitted, referring to a programme that provides subsidised public housing for sale.

Aspiring home-buyers could look to a government plan to build 80,000 HOS flats in 10 years, which was announced in Chief Executive Leung Chun-ying’s policy address a week ago, he said.

In the policy blueprint, Leung also pledged to build 200,000 public rental flats for lower-income families in a decade.

But housing supply would not increase significantly until the second half of the 10-year period, Cheung said.

He said the intensive construction ahead also meant the government must inevitably inject more money into the Housing Authority – which builds and manages public housing estates.

The minister stopped short of giving an estimate, saying only that the administration would allocate more funds to the authority on a large scale.

On January 7, the authority warned that its overall consolidated surplus would drop 83 per cent over four years to HK$958 million in 2018.

This projection does not take into account the plans to further increase public housing that Leung announced last week.

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This article is now closed to comments

doug153
johnyuan, property developers can only afford to play the waiting game because the financing cost of the enormous land/apartment banks is kept artifically low by the HKD peg.
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It is absurd that in a city with CPI inflation at ~4.5% and GDP growth at ~3%, interest rates are effectively zero. The lack of independent monetary policy in HK has created an enormous burden on the middle and lower class.
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In a normal floating rate regime, the influx of money into HK property would result in an appreciation of the exchange rate, benefiting wage earners. Without this ability to appreciate, the effect is instead asset price inflation, which benefits those who own the assets at the expense of wage earners, who end up paying higher rent and higher prices for imported items, such as food and energy.
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The artificially low cost of financing and inability of the exchange rate to appreciate is a direct contributor to Hong Kong now having the highest Gini coefficient (level of income inequality) in the developed world [1], exceeded only by countries such as Zambia, Angola, Bolivia, and Haiti.
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It is unfortunate that most people seem to believe the governments statements about the peg giving HK economic stability, when it fact it simply benefits the rich at the expense of everyone else.
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[1] See Wikipedia, list of countries by income inequality
dynamco
there used to be tenant protection under the law
They binned that during SARS
'conveniently' it never came back
Why is that ? is there really a tycoon developer / Government nexus ?
so now of course the evil landlords can do as they wish
Many would rather keep places empty rather than back down on their demands
Meanwhile as has happened for years, non vetted foreign funds flow in to buy property as the bolt-hole laundry for black funds
Artie
Its just not good enough that additional supply of flats are coming in the latter part of 10 years ...
johnyuan
To doug....
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The cheap financing cost is a factor but may not be the deciding one. The property developers can use it for other business without missing any chance to make money. As a conglomerate, it may have designed to do just that while waiting out for a kill in the property market which always provides them with a maximum profit that other business hardly can.
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By the way, housing price in Hong Kong only reflects what traffics would bear without the benefit of competition of a free market. Collusion among the property developers in setting prices especially for the heavy traffics from mainland is no brainer – a drop of 20% in price tag suddenly popped up when traffics get to slow down.
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Yet these property developers are still weighing in with waiting time to build or to release inventory at a sale price that is affordable by locals. They don’t do charity.
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The financing game is too complicated for me as well for the property developers.
johnyuan
Hong Kong’s housing cost being the highest in the world in the last survey shouldn’t be a surprise. Pricing on housing in Hong Kong is not set by a free market like even food and transportation as the paid survey by the Heritage Foundation like the world to believe in.
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While historically prior to this current Administration,housing price is set by including the cost of its rail transport. As of late, mainlanders’ interest in buying up flats in Hong Kong had turn the property market into a predatory practice. The property developer only built for the mainlanders and set the housing price not only unaffordable by locals but as high as there are buyers from the mainland. It is totally artificial and the locals are left out in the cold. The collateral damage is very real.
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The property developers were using Hong Kong precious land resource to build for outsiders who mostly using property investment just parking their money abroad. The property developers know it but still fighting against government’s cooling measure. No legislator committee on housing show up few days ago to approve government latest housing scheme is a slap on Hong Kongers’ face much instructed must be by the unconscionable local property developers.
johnyuan
I will advise CY Leung first permanently delink MTRC from property development. Let the cost of building new track and station stand on its own means. Secondly, move forward with your housing target but stop depending on the property developers to do so. You will not go anywhere if you do because property developers can afford to do a waiting game by doing nothing. Remember, property developers in Hong Kong are conglomerates with income from many sources.
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Hong Kong can't afford to be a modern city if it still depends on the parasitic property industry in Hong Kong.

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