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Hong Kong housing

With new land to trim supply shortfall, Hong Kong government sticks to target of 280,000 new public flats over next 10 years

Housing chief says target will be revised after city’s main provider of public housing completes study on balancing the supply of subsidised flats for sale with rental homes

PUBLISHED : Wednesday, 20 December, 2017, 4:12pm
UPDATED : Thursday, 21 December, 2017, 9:21am

Hong Kong is slightly closer to meeting its target of sufficient public housing for the next decade, its housing chief announcing on Wednesday it had marginally reduced its supply shortfall. But Frank Chan Fan warned of bigger challenges ahead in finding more land.

Chan, the housing minister, said the government had “virtually used up all [readily available] sites at hand” for public housing and that officials would have to find other land to speed up supply.

He announced that the government would stick with the target of building 460,000 flats over the next decade, 60 per cent, or 280,000, of which would be public flats.

Of the 280,000 public flats, 200,000 would be public rental flats and 80,000 would be subsidised flats sold to poor and middle-income families. Chan spoke at the unveiling of the government’s latest Long Term Housing Strategy progress report, which legislators later panned as lacking any progress.

The previous government last year admitted it had identified only enough land to build 236,000 public flats by 2027, leading to an expected shortfall of 44,000 flats.

But this year, the government led by Chief Executive Carrie Lam Cheng Yuet-ngor identified new land on which to build 1,000 flats, narrowing the shortfall to 43,000.

“We indeed are facing an extremely difficult challenge to find enough land for housing given Hong Kong’s situation today,” Chan said. “But we have made it clear that our administration will not back down in the face of difficulties … we are confident that we will be able to find enough land.”

In recent years Hong Kong has repeatedly been crowned the world’s most expensive city in which to buy and rent property. Those high prices force thousands of residents to live in squalid conditions like subdivided flats.

Watch: Why is Hong Kong housing so expensive?

Public rental housing is a safety net for poorer Hong Kong families, but there is a long queue. More than 280,000 applicants are currently waiting for public housing, with families facing an average wait of four years and six months for a flat.

Looking ahead, the government said it would have to turn to “non-spade-ready” sites – those that have yet to be properly zoned and require additional infrastructure or clearance processes. Housing projects on such sites generally take around seven years to complete, as opposed to five years with “spade-ready” sites.

Chan said there were other options, such as increasing the land’s plot ratio to allow a higher building density, or piecing together smaller plots into bigger ones. He also cited previous cases under special circumstances in which the government was able to convert some land originally allocated for private residential housing for public housing.

Policymakers are also looking into how to increase land supply, with a 30-member task force reviewing options such as reclamation and using the land reserves of private developers.

Chan said the public housing target would be adjusted at a later date as it has yet to reflect new policies aimed at boosting home ownership proposed by Lam during her policy address earlier this year.

This is to allow the city’s main provider of public housing, the Housing Authority, to complete a study on the extent to which it can increase the supply of subsidised flats without affecting its pipeline of public rental flats.

City University housing policy expert Lawrence Poon Wing-cheung said that the reduced shortfall of 1,000 flats “did not mean much”.

“It’s not even 0.5 per cent of the whole housing supply target,” Poon said.

Poon said that the government should revise the target ratio to provide more subsidised flats for sale, instead of private flats. He proposed cutting down the annual private flat supply from the current target of 18,000 flats to 8,000, and increasing the target of subsidised flats from 8,000 to 18,000 a year.

“The government should put the focus on selling subsidised flats because then the government can at least guarantee that they would be affordable,” he said.

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After Chan spoke, lawmakers criticised the government for issuing a “no progress” report.

Wilson Or Chong-sing, who sits on the Legislative Council’s housing panel, said he was disappointed there was no change in the government’s housing targets.

“For many years, the number of public housing applications has only risen, and is almost at 300,000. This shows that the government’s target to build 200,000 public rental flats in 10 years has already deviated from actual needs,” Or said.

He said the government needed to adjust the ratio to have more new public housing flats instead of new private flats.

Lawmaker Andrew Wan Siu-kin said Chan was “being repetitive” and did not have any concrete measures to tackle the housing problem.

The first long-term housing strategy report was released in 2014, and the supply target was cut from 480,000 to 460,000 flats in 2015. The target is calculated based on projections for the net increase in the number of households, the number of households displaced by redevelopment and the needs of those who are inadequately housed.