Hong Kong housing is built to serve the market, not the people

John Chan says a comparison of housing policies in Hong Kong and Singapore brings home the main problem here – our plan is shaped by the needs of the property market, rather than those of the residents

Hong Kong housing

John Chan

Published: 9:03am, 11 Feb 2017

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When Sir Murray MacLehose arrived in Hong Kong in 1971 to assume office as the city’s governor, the most visible signs of the acute housing shortage were the squatter huts on almost every hillside. Many others were living in pre-war buildings, in deplorable conditions. In 1972, he launched an ambitious 10-year housing programme, with the aim of providing decent accommodation for 1.8 million people.

Between 1973 and 1982, some 220,000 flats were built, of which 180,000 were public rental flats, and 23,000 were built for sale under the Home Ownership Scheme (HOS), which was set up in 1976. At the time when MacLehose left Hong Kong in 1982, most of the hillside squatters had gone.

Today, hillside squatter huts have re-emerged and are flourishing in a different form – the ubiquitous subdivided units hidden in old residential buildings and former industrial buildings. This shows that the shortage of affordable housing is no less acute today than it was in the early 1970s.

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However, since MacLehose’s departure, Hong Kong’s housing policy has become so twisted that it has ceased to be a housing policy and become merely a residential property market policy.

In the 10-year housing plan launched by Tung Chee-hwa, the first chief executive of the special administrative region, only 50,000 of the 85,000 flats planned to be built every year were public flats. Such a policy was bound to be heavily influenced by the private market. Therefore, it was no surprise that the plan was quietly shelved after the collapse of the property market in the wake of the Asian financial crisis. After he took over as leader, Donald Tsang Yam-kuen succumbed to market pressures, halting land development and ceasing to build HOS flats altogether.

Hong Kong’s housing policy has become so twisted that it has ceased to be a housing policy and become merely a residential property market policy

Whether it was Tung’s shelving of the 85,000-flats-a-year plan or current Chief Executive Leung Chun-ying’s imposition of different kinds of stamp duties, these were merely policy measures in response to either too little or too much demand in the residential property market; they do not add up to a policy focused on meeting the constant housing needs of the people.

Most people would agree that Singapore has a successful public housing policy. The sale of residential flats built by a Housing and Development Board was in fact modelled after Hong Kong’s HOS. Today, the figures show why Singapore has been successful in dealing with the housing needs of its citizens in the past 30 years while Hong Kong has failed.

When MacLehose arrived in 1971, Hong Kong had a total land area of 1,000 sq km; today, the figure stands at 1,104 sq km, an increase of about 10 per cent. During the same period, land area in Singapore has risen from 586 sq km to 719 sq km, an increase of 133 sq km, or 22.7 per cent. Notably, from 1997 to 2015, the total land area in Singapore increased from 647 to 719 sq km, an increase of 72 sq km, which makes up 10 per cent of total land area in Singapore, whereas basically no new land has been added to Hong Kong since 1997.

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People watch as workers inflate a giant spider by Singaporean artist Jackson Tan in Singapore’s Marina Bay area this month. Marina Bay was built on reclaimed land. Massive land reclamation has been carried out in Singapore in the past 20 years. Photo: AFP

Some 80 per cent of Singaporeans live in public housing flats, while the figure for Hongkongers in 2015 stood at 45.6 per cent. In terms of owner occupier rate, some 90 per cent of Singaporean households live in their own housing. In Hong Kong, that figure is about 50 per cent.

There is also an interesting comparison in that only about 5 per cent of land in Singapore is classified as protected, not for development, whereas in Hong Kong the untouchable country park land occupies 40 per cent of the total land area.

Hong Kong can draw two lessons from the comparison with Singapore. One, Singapore’s housing policy is heavily state-dominated, and is focused on catering for the housing needs of its citizens, while in Hong Kong, housing policy has been to a very large extent dictated by residential property market fluctuations. Abandoning the 85,000-unit programme after the property market crash and the suspension of HOS flat-building during Donald Tsang’s term are clear examples of market influence on policies that were supposed to fulfil the long-term basic housing needs of Hongkongers.

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Second, there has been an almost complete absence of land supply strategy in Hong Kong, particularly since the change of sovereignty. This contrasts with the massive land reclamation carried out in Singapore in the past 20 years. In that time, the SAR government halted land reclamation and has been hesitant in proposing development of the fringe areas of the country parks due to opposition from environmental protection groups.

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All chief executive hopefuls in the upcoming election should see dealing with the housing problem as their top policy priority. John Tsang Chun-wah aims to raise the percentage of people living in public housing to 60 per cent while Carrie Lam Cheng Yuet-ngor plans to massively increase land supply. It is important that new thinking is imbued into the long-held market-led, market-oriented policy. The new chief executive should abandon the “market first” mentality, and focus his or her efforts on increasing land supply and maintaining a steady supply of affordable housing to users, not investors.

John Chan is a practising solicitor and a founding member of the Democratic Party

This article appeared in the South China Morning Post print edition as: built to please the market

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