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Hong Kong housing

Affordable homes to be focus of Hong Kong housing policy, Carrie Lam vows

City leader notes that increases in supply have not cooled market

PUBLISHED : Wednesday, 02 August, 2017, 3:11pm
UPDATED : Wednesday, 02 August, 2017, 9:51pm

Helping Hongkongers buy their own homes amid skyrocketing property prices will be the focus of the government’s housing policy, Chief Executive Carrie Lam Cheng Yuet-ngor said on Wednesday.

The city leader said she was “very concerned” about home prices, which are still rising despite increased supply.

She said she would push ahead on election pledges to build houses exclusively for local first-time buyers; allow subsidised flat owners to rent out their properties without having to pay a premium; and study making subsidised flats cheaper by no longer using market rates as a price guide.

“As we can see, despite an increase in the supply of land and first-hand flats, property prices remain very high,” Lam said.

“So we need to use government policies to solve the social problem of [people finding it] difficult to buy homes for the first time.”

We need to use government policies to solve the social problem
Chief Executive Carrie Lam

Lam said official forecasts suggested 98,000 private flats would come on the market over the next three to four years.

But recent increases in housing supply have not cooled the market, with the private property price index, which tracks overall price trends, increasing in each of the 15 months leading up to June.

Earlier this year Hong Kong ranked as the world’s least affordable city to buy a home for the seventh year running, according to the Demographia International Housing Affordability Survey. In the third quarter of last year, the city’s flats cost 18.1 times the gross annual median income. That figure was much higher than that of second-placed Sydney, whose ratio was 12.2.

“The increase in salaries cannot catch up with the increase in property prices,” Lam said.

She noted that the average monthly mortgage payment for a 485 sq ft flat would take up 66 per cent of the median monthly private household income, according to figures from the first quarter of the year.

“I am very concerned about the phenomenon,” she said.

The chief executive added it was important to continue efforts to increase local land supply.

“As I have said before, maybe Hong Kong does not lack land, but a consensus on developing land,” she said.

She said the Development Bureau would form a working group this month composed of non-official professionals. The group would lead a “society-wide debate” over the city’s land resources, and she hoped it could decide within a year where Hong Kong should seek land for the future.

Secretary for Development Michael Wong Wai-lun said the group would first discuss different plans to increase land supply before consulting the public about the plans.

He said the group would be willing to discuss all suggestions, including controversial ones such as developing country parks and filling in Plover Cove Reservoir for development.

“At this stage, we welcome all suggestions, no matter how outlandish they are,” Wong said.

He added that the chief executive would appoint members of the group while the bureau would serve as the secretariat.