How Hong Kong can build affordable housing on developers’ land banks in rural areas
Tony Tse says the Hong Kong government should jointly develop New Territories farmland with the developers who own it by making them a fair offer of partnership
The housing shortage in Hong Kong is one of the government’s most pressing concerns. Chief executive-elect Carrie Lam Cheng Yuet-ngor’s proposal for “starter homes”, in which she has floated the idea of public-private cooperation, is promising, and she has said it would be further discussed after she takes office.
We certainly need more rungs on the “housing ladder”, and it is crucial that each rung caters to people in different income groups in Hong Kong. In fact, the government has pledged to do so but has yet to succeed by some measure.
How to make Carrie Lam’s ‘starter homes’ truly affordable for Hong Kong people
For example, the “Hong Kong Property for Hong Kong People” scheme was aimed at helping Hong Kong permanent residents buy their own flat. However, as it turned out, the prices were far from affordable for many, at over HK$10,000 per sq ft, and the most expensive unit cost over HK$14 million. How is it possible for Hong Kong people with average family incomes to afford such a unit?
When demand is high and supply is limited, we cannot rely on the free market system to work out an acceptable result
It’s clear that when demand is high and supply is limited, we cannot rely on the free market system to work out an acceptable result. Government intervention is called for.
In order to increase housing supply, Hong Kong should take a public-private partnership approach. It is estimated that a group of private developers holds nearly 1,000 hectares of undeveloped land, mostly farmland in the New Territories. If 20 per cent of this land is allowed to be developed, to yield a 50-50 mix of subsidised public flats and private housing, it would substantially increase the supply in a short period of time.
The government could sell the public flats to first-time home buyers at a pre-determined price, similar to the subsidised housing scheme.
Furthermore, under this approach, developers must commit themselves to excellence in planning, management and design, in order to maintain their competitiveness in the market, in respect of their portion of the housing units in the development.