Root-and-branch reforms needed if we are ever to solve our housing woes
Either we need an authoritarian government or one with a popular mandate to push through policies that will punish developers who hoard land
Chief Executive Leung Chun-ying recently boasted about the success of his housing policy in a long interview with TVB. “When I first came to this office, people were complaining about ‘property hegemony’ all the time,” he said. “Now people have virtually stopped talking about it.”
The implication is that his policy has helped increase the supply of land and new flats, and that unlike his predecessors, his government has stopped being overtly friendly to big developers.
Both are true – to an extent. The big boys certainly have no love for Leung and have been badmouthing him to the powers-that-be in Beijing whenever they can.
Leung’s housing policy is also defensible, though it was born more out of necessity than planning or foresight.
When housing supply in both public and private sectors were deliberately restricted by the two previous administrations and prices had heated up to irrational levels, what options did Leung have?
In fact, Leung’s housing supply policy and anti-speculation measures are no more than a band-aid. The reason few people talk about “property hegemony” now is mostly because the housing market is deflating, and developers themselves are desperate to offload flats by offering sweeteners such as subprime-like financing.
The profound distortions and wastage imposed on the entire economy by the property sector are well understood. As my Post colleague Yonden Lhatoo has observed, developers have been hoarding land for decades – the largest three have, between them, 90 million sq ft in their land banks. It’s an anomaly for a developed economy like Hong Kong’s that there are no punitive taxes and penalties on idle land.
That was started during the colonial era and originally, it was not unreasonable. Developers do need a steady supply of land to plan for business in the short to medium terms. But once the amassing of land becomes unrestricted hoarding to the detriment of the common good, slapping a heavy penalty on long-held idle land is a no-brainer.
We are not talking about raiding private land banks or expropriating land by the state. However, nothing short of root-and-branch reforms in land policy could offer a lasting solution. Unfortunately, only a highly authoritarian government, or one with a popular mandate, would have the will to carry that out. Our perennially weak, post-handover government will never do.