Carrie Lam must spare no effort in solving housing conundrum
As home prices continue to rocket, chief executive-elect needs to take real action to solve what appears to be an intractable problem
There are no easy solutions to Hong Kong’s housing conundrum. Despite repeated efforts by previous administrations to cool down the red-hot property market, home prices continue to spiral, so much so that the city has become one of the least affordable in the world for housing. What’s more worrying is that officials have apparently resigned themselves to the situation. There needs to be a higher sense of urgency to tackle the problem.
According to the Rating and Valuation Department, home prices rose 14.3 per cent in February compared with the same month last year, and advanced 1.8 per cent since the beginning of 2017. That pushed the home price index in February up by another 1.1 per cent to 312.8.
The runaway prices show the market has not been dampened by repeated anti-speculation measures, the last one in November being an across-the-board 15 per cent stamp duty for all home transactions by non-first-time buyers. Adding to the woes is what appears to be a loophole in the levy. It has been reported that some 20 per cent of purchases at a development in Kai Tai reserved for locals were multiple-flat transactions, meaning buyers could get around the stamp duty even though they may not be for self use.
Separately, developers are also flooding the market with so-called micro-flats. The number of flats built each year that are smaller than 215 square feet jumped from 81 to 206 over the past four years, representing a 154 per cent rise. Flats between 215 to 429 sq ft also rose from 1,511 in 2012 to 3,731 last year, while bigger flats – 735 to 1,075 sq ft – dropped by 18 per cent during the period.
Responding to the rocketing home prices, chief executive-elect Carrie Lam Cheng Yuet-ngor said housing would be of utmost importance on her agenda. But she also sought to dampen hopes of any turnaround in the near future, saying efforts by her predecessors did not yield the desired results. The response does not instil much public confidence.
Her ideas on housing are also uninspiring. Among the highlights are a so-called starter home purchase scheme and an overhaul of land supply. Whether this will make a difference is yet to be seen.
When Leung Chun-ying took over from Donald Tsang Yam-kuen in 2012, he rightly made housing his top priority. While the will is there to solve this problem, it appears almost intractable. We trust Lam realises that the challenges facing her are even more daunting. The former government No 2 worked closely with Leung over the past five years and must know how important housing is to the people. She needs to show not just stronger determination, but also come up with more effective measures to resolve the conundrum.