CY Leung's housing policies have made situation worse

Albert Cheng says the government should stop interfering in the market and address the real issue by building more affordable homes

PUBLISHED : Thursday, 06 February, 2014, 6:31pm
UPDATED : Friday, 07 February, 2014, 3:10am

Chief Executive Leung Chun-ying beat his rival in the popularity race and hence won the support of Beijing to take the top job in Hong Kong, mainly by blowing his own trumpet over his land and housing policies.

He also managed to fool a lot of people, including intellectuals and the professional elite, into believing he had the will and the ability to resolve the two thorny issues at the heart of our deep-rooted social conflicts and widening wealth gap.

But as a famous saying goes: "You can fool all of the people some of the time, and some of the people all of the time, but you can't fool all of the people all of the time."

The truth will out. For more than 18 months, since Leung came to power, housing problems have worsened rather than improved. It's still extremely difficult for Hongkongers to buy their own homes because of the unrealistically high property prices and the adverse consequences of the government's tough measures to cool the market.

It remains a pipe dream for most Hongkongers to realise their most basic housing needs because of the severe land shortage.

Leung has in fact not addressed our perennial housing problems, just like his predecessor, whom he vehemently criticised for surrendering to the rich and powerful property tycoons and allowing government-business collusion to fester, eating away at our core values.

Leung's first favourable policy benefiting property tycoons was to allow 5,000 "white form" applicants for Home Ownership Scheme flats per year to buy these flats in the second-hand market without paying a land premium. White-form applicants are prospective buyers living in private flats and do not receive any housing subsidy.

This relaxation immediately pushed up demand well beyond supply, especially due to a surge of "green form" applicants - lower-income people living in public housing - snatching up second-hand HOS flats in anticipation of rising demand. Eventually, prices of second-hand HOS units rose sharply, at the same time boosting the prices of private housing at the lower end of the market.

Unscrupulous property developers of luxury apartments immediately took advantage and raised prices further.

As a result, our housing prices are still among the most expensive in the world. Further, Leung's government extended the time allowed for developers to pre-sell incomplete units. This measure, ostensibly to increase supply, actually gives developers ample time to offload their properties to reap big profits.

The measures to supposedly cool the market are, in fact, interfering executive measures that show a total disregard for the normal market order.

They have not only led to a stagnation of the private and second-hand markets, they have also created additional obstacles for genuine homebuyers looking to improve their living environment.

In his policy address, Leung said he was determined to help Hongkongers live in a better environment. Yet he has been doing the opposite.

In reality, even if property prices came down, they would still be among the most expensive in the world, according to the latest survey of current global housing prices by The Economist.

This year's policy address seemed to lay out a long-term strategy for public housing, but the devil is in the details.

The whole point of the exercise seems to be for the government to provide developers with ample land to build private units in the next five to 10 years.

In the next five years, there will be about 150 plots of land converted for residential purposes - sufficient to build around 210,000 public and private units.

These plots have to be developed before construction work can begin and the government will have to pay for the development of infrastructure.

In other words, public funds are being used to subsidise private residential developments.

To maximise their profits, it's almost certain that developers will build even bigger residential blocks that have a negative impact on our overall living environment.

The proliferation of high-rise buildings will increase our living density and in turn worsen the problems associated with an urban heat island phenomenon.

We need to solve our housing problem. While the government has no duty to assist Hongkongers in buying their homes, it should not shirk its responsibility to resolve our housing shortage.

The only option is to build lots of affordable public housing units.

The government cannot continue to turn a blind eye to the fact that most Hongkongers are being enslaved to work their entire lives to save up for a roof over their heads.

Albert Cheng King-hon is a political commentator. [email protected]