Public housing in Fo Tan, Hong Kong. Photo: Edmond So
Jake's View
by Jake Van Der Kamp
Jake's View
by Jake Van Der Kamp

Hong Kong’s housing shortage is not one of needs but of aspirations

Cheap subsidised public housing rents have created a situation where less people are living in each flat, meaning the problem is one of demand, not supply

Increasing land supply will not be enough to solve Hong Kong’s housing crisis if more subsidised flats are not built, property experts said yesterday...

SCMP February 6

Let me acquaint you with an anomaly that sits at the heart of our housing difficulties. It suggests that subsidies do not make things better.

As the first chart shows, in June 2003 the total stock of public rental housing (PRH) flats stood at 664,000 units. The total number of occupants was 2.2 million.

Shift forward to September last year, the last date for which I have figures, and the number of PRH flats stood at 802,000, an impressive 138,000 more than in mid 2003. But the number of occupants had risen by only 37,000, much less than the increase in the stock of flats.

This trend shows up even more strongly when you go back to 1990. As the first chart also shows, there had been no increase in the stock of PRH flats between the end of 1990 and mid 2003. The property price collapse of 1997 to 2003 got in the way.

But at the end of 1990 there were an estimated 2.9 million people living in PRH flats. The numbers actually fell by some 700,000 between 1990 and 2003 and then only rose marginally despite a big public housing construction boom.

I shall grant you that there is some uncertainty in the figures. This is not a trend that the Housing Authority would be proud to trumpet. But whether greater or smaller than I have outlined, there is no mistaking the direction of the trend.

And the reason, as the second chart shows, is a steady decline in the number of occupants per PRH flat. It is a much steeper decline than for our total housing stock, and the PRH occupancy figure is now lower than it is in the private sector.

Let me put it another way. No one complained of a housing shortage in mid 2003. Prices were low and people moaned only about how poor an investment bricks and mortar had proved to be.

Fifteen years later and we are told that the housing shortage is dire despite the fact that population growth has been less than the growth in home construction. How strange.

What we have here is not a shortfall from housing needs but from housing aspirations. People want less crowding in their homes, or even to live on their own, and to a significant degree they have been able to achieve these goals.

They have particularly been able to do so in public housing because PRH rents are so low, an average of about only HK$1,500 (US$192) a month, that income budgeting no longer pulls people together and sometimes actually drives them apart. Low rents have made divorce cheap.


At the same time, applicants for PRH flats have grown significantly younger, better schooled and with better career prospects. They get on the waiting lists because they can. Why not when there is such a savings to be had in going to the government for your housing?

There is more of a demand problem at the heart of our housing difficulties than there is of a supply problem, and it has largely been created by subsidies.

This article appeared in the South China Morning Post print edition as: HK’s housing woes show us the dark side of subsidies