The spark that ignited the city’s worst political crisis has shifted from a controversial extradition bill to general rage against the local authorities for their ineffectiveness in addressing some of the most pressing issues affecting life in Hong Kong: housing, job satisfaction, education and future prospects.

Unaffordable homes, and having to wait a decade to gain access to subsidised public housing, are just two of the myriad of problems confronting Hong Kong, Chan said. “There really is no opportunity for young people at the bottom of the social structure to climb up,” he said.

The unprecedented protests, entering their 16th week, are the culmination of many decades of neglect by a laissez-faire government of the underclass, and housing affordability has become the most poignant manifestation of this dissatisfaction.

The root of the problem can be traced back to Hong Kong’s history, when British administrators created a low-tax system for the former colony, consistent with their strategy of running a worldwide empire. On the basis of low personal income and corporate taxes, with no value-added tax or import duties, Hong Kong quickly grew from a transshipment port and China’s front door into an international finance centre. That low-tax tradition continued after Hong Kong’s return to Chinese rule in 1997.

Low taxes come with a hefty bill, however, as the government must look for other sources of fiscal income to spend on infrastructure, education, health and public services.

For decades, the biggest revenue source was the sale of public land to developers for building homes, factories or shopping centres. Land premiums and stamp duties, considered non-stable tax revenue, are projected to make up 33 per cent, or more than HK$197 billion (US$25.2 billion), of the government’s income in the financial year that began on April 1, down from the last financial year’s 42 per cent.

“Without the big chunk of income from the property market, how can the government support its expenses?” asked Moses Cheng Mo-chi, chairman of the Insurance Authority and chairman of a 2000 task force set up to explore ways of broadening Hong Kong’s tax base. “If we do not have new sources of stable income, the high land price policy will not change. We cannot get out of this” vicious cycle of high land prices, lack of affordability and public grievance, he said in an interview.

About 45 per cent of all homes sold in Hong Kong are built by five developers – CK Assets of the Li family, SHKP of the Kwoks, Henderson Land of the Lee family, New World Development of the Chengs and Sino Land of the Ng family.

That has put them at the top of the wealth list. Eighteen, or 36 per cent, of the 50 richest people in Hong Kong in 2019 were property tycoons, according to Forbes.

“Capitalism creates a business environment where the winner takes all,” said Ronald Chan, founder of investment firm Chartwell Capital and a member of the Hong Kong stock exchange’s Listing Committee. “Several companies … dominate Hong Kong, consolidating control of sectors from supermarkets to pharmacies, jewellery stores to utilities and telecoms to transport networks.”

The fortunes of Hong Kong’s 93 wealthiest billionaires – estimated at US$315 billion in 2018 – made up about 86.6 per cent of the city’s gross domestic product, according to Wealth-X’s Billionaire Census.

The average Hong Kong household needs 20.9 years of income, without spending anything on food, education, travel or leisure, to afford a flat, according to the Demographia International Housing Affordability Study.

To be sure, Hong Kong’s government has not been unaware of the problem. Former Financial Secretary Henry Tang Ying-yen and former Secretary for Financial Services and the Treasury Frederick Ma Si-han tried in 2003 to implement a goods and services tax based on the recommendations of Cheng’s task force to broaden the fiscal income base, but had to scrap the plan amid opposition by the city’s interest groups, who exert their influence through the functional and district constituencies in the local legislature.

Will the current political crisis and outpouring of rage provide an opportunity to break the policy gridlock and solve Hong Kong’s housing problem?

“For the sake of public interest, and for the sake of people’s livelihoods, it is time developers show their utmost sincerity instead of minding their own business, hoarding land for profit and earning the last penny,” People’s Daily, the mouthpiece of the Communist Party, said.

Public consultation on the proposal started on September 13 and the bill will be ready for legislators to vet in October, when they return from their summer break. Land and housing policies are expected to be the focus of Chief Executive Carrie Lam’s Policy Address, which will be announced next month.

“Can the government solve the city’s housing issue on its own, without the help of private developers?” said Reda chairman Stewart Leung Chi-kin. “If that were the case, the problem should have been solved years ago.”

Analysts said the low-interest rate environment in Hong Kong will continue and that could pressure Lam into cooling home prices.

Hong Kong is not short of land, where 40 per cent of the city’s land mass is reserved as nature parks. But focusing on land supply was akin to addressing the symptoms of a disease, not finding a cure for the cause, said the Insurance Authority’s Cheng.

“We need government leaders, political parties, interest groups to realise the importance of harmony. They need to make sacrifices for the greater good, ” he said.

A short-term solution might be possible through the privatisation of subsidised public housing, which would allow many existing public flats to add to the supply and provide immediate relief, said Richard Wong Yue-chim, professor of economics and the Philip Wong Kennedy Wong Professor in Political Economy at Hong Kong University.

“Turning public flats into home ownership flats is by far the fastest way to address our housing crisis without increasing land supply”, because land reform was complicated by vested interests and bureaucratic delays, as well as restrictive planning and building codes, he said.

“Home ownership is a source of savings and wealth accumulation. There is wealth disparity between those who own a flat and those do not, so people feel the inequality,” Wong said. “When young people see no hope of moving forward with their lives, no hope to own a home, they take to the streets.”

Singapore, a city state where most residents live in high-rise buildings, may offer a solution for Hong Kong. The city state’s Central Provident Fund, as the mandatory pension is called, can be used for paying mortgages, insurance and even education, unlike Hong Kong’s Mandatory Provident Fund, which is usable only for retirement.

Hong Kong’s government could let the MPF subsidise low-interest rate mortgages for certain groups, such as young married couples, to help them get on the property ladder, said Chartwell’s Chan.

Would that help cool the rage that is fuelling Hong Kong’s protests?

“It’s so difficult to get onto the housing ladder,” said Chan at Price Edward station. “I’m probably unqualified for a flat because I don’t have a tertiary degree. I hope I can do it one day, but only if I start a business, not by working a regular job.”

Additional reporting by Liu Yujing