Affordable housing for all? Only with a shift in attitudes from governments, including in Hong Kong
Barry Wilson says ensuring adequate housing, as set out in the UN development goals, will require not only greater supply but also curbing speculation, as well as embracing advances in construction technology and new platforms like the sharing economy
One of the targets of the UN Sustainable Development Goals is to “ensure access for all to adequate, safe and affordable housing and basic services, and upgrade slums by 2030”.
However, meeting poorer people’s housing needs is requiring larger subsidies, at a time when most countries are cutting back on public spending, or even pulling out of state-subsidised housing altogether. The US housing market, between 2001 and 2013, saw the disappearance of 2.4 million units for low-income earners.
An insufficient supply of affordable housing seems to have become a common crisis worldwide, for both rich and poor economies. High housing costs are even squeezing middle-income families, and in the world’s costliest cities like Hong Kong, households earning far more than the median income can still be financially stretched by rent or mortgage payments.
People are stuck in inadequate homes or pay so much of their incomes for housing that they are forced to forgo other necessities.
Not everyone can own property and not everyone wants to. Germany, for instance, has some of the lowest property ownership levels in the developed world, with about half the population living in rental accommodation, a level comparable with that in Hong Kong.
Why are homes in Hong Kong so expensive?
However, the difference is that, in Germany, this is mostly by choice. People prefer not to purchase, with tenants enjoying greater rights and afforded stronger legal protection. Tenants feel more invested and undertake far more of the maintenance themselves than would be allowed in Hong Kong. On average, a tenant spends three to seven years in one property, much longer than in other countries.
The negative equity that follows property booms has further reinforced the German suspicion of rising house prices. They do not sit around a meal table discussing how much their home has risen in value over the past months. Home prices rose by an average of 83 per cent between 1970 and 2008 in other member nations of the Organisation for Economic Cooperation and Development, but in Germany, they fell 17 per cent. It is also difficult to get mortgages, you need a large deposit, and this is combined with a strong cultural reluctance towards risk and borrowing.
For Chinese, by contrast, owning a home is one of the most important life aspirations. A lack of affordable first homes is causing stress among the younger population; couples are marrying later in life, becoming older parents, or not marrying at all. More recently, with spiralling prices, buying property as a financial investment has appeared essential to the younger generation who see their peers getting ever richer through property speculation.
According to cost of living trackers Numbeo, as of June, the price-to-income ratio for property in both Shenzhen and Hong Kong was the world’s highest at nearly 40 years, while China’s national average of over 27 years made it by far the world’s most unaffordable market. To put that into context, the US has a national average of just over three years. Rental yields in the US are some of the world’s best, whereas the rental market in mainland China is still some way behind rising home prices, making the buy-to-rent option unattractive, with newly purchased property left deliberately empty, sometimes for years.
The German situation, where landlords have limited powers and lending is heavily restricted, is a clear illustration of factors that can make housing less attractive as a speculative investment tool.
In France, after war damage reduced the number of houses in many cities, rental prices increased dramatically, leading the government to enact new rental laws that effectively brought to an end the speculative benefits of housing investment and helped to balance landlord and tenant relations.
In Singapore, more than 80 per cent of the population live in government-provided public housing estates, with its Housing and Development Board hugely backed by state funding.
China’s property bubble of the past decade has finally been checked through strong government intervention on ownership registration and lending, effectively reining in speculation and mass ownership by the wealthiest sector of society.
As the global population escalates and space becomes ever more precious, is it acceptable that housing, a basic human need, be hoarded, commodified and traded to further benefit those least in need?
To avoid civic unrest and social disruption, governments must strengthen the supply side of housing in the public sector while balancing the demand side against commodity speculation. They must see affordable housing provision for all as a community investment, rather than a burden.
Today’s youth, even of the educated and professional classes, are growing up with diminished hope of ever owning their own property. But more than that, they are increasingly unable to afford to rent suitable accommodation in the places they need to live and work.
Most sectors of society have been paying an ever-increasing percentage of their income towards housing over the past century. If we are going to meet the UN development goals, then a significant shift in attitudes towards housing needs to take place.
Technological advances in construction quality, coupled with a new willingness to live more “spartan” lifestyles in micro housing, are seeing a comeback in the US of “manufactured housing”, including mobile homes. Fully constructed off-site and moved into place on wheels, these are acting as a source of affordable housing not just for rural communities but also in terms of utilising urban land, such as private garden space, and are becoming popular with younger people wanting to find a home.
No land ownership is required and building codes don’t apply, while their standardised manufacture means costs are minimised.
New hybrid home ownership and land rental models are allowing the growth of “resident-owned communities” – with flexibility for owners to share management and control of parking, managing infrastructure, operations and common areas. Members may own their homes and rent empty spaces to generate revenue that covers debt service and operating expenses.
Could the state also be encouraged to provide and manage such facilities, even by utilising land temporarily?
The sharing economy is already starting to create new ways of thinking about many basics of life, including ownership, transport and accommodation. The Airbnb phenomenon has shown new ways of utilising housing resources. Other new platforms, with shared or fractional ownership and usage rights, are likely to develop.
Recently, Beijing announced measures to allow property rights to be shared between the government and individual buyers, in order to lower the threshold for home ownership while reducing direct government expenditure. Platform co-operatives, which share the value they create with the users they depend on, are on the rise.
We can hope and possibly expect such platforms to influence the supply of housing in the next few years, making ownership as we know it a thing of the past.
Barry Wilson is an urbanist, lecturer and professional consultant. www.initiatives.com.hk