The interior of a subdivided flat in Sham Shui Po. Low-income households in subdivided units often have to endure demeaning living conditions. Photo: Edward Wong
How Hong Kong’s public housing policy is failing those most in need
Paul Yip says making rich tenants pay much more for public housing flats and easing dependence on land premiums for government revenue would be primary steps to improving conditions for the most disadvantaged in the world’s costliest housing market
It would take the average Hongkonger today more than 18 years, using all their salary, to buy a flat of less than 500 square feet, according to the annual affordability survey by Demographia. Hong Kong has topped the home prices ranking for seven years in a row; Sydney is second, where just over 12 years’ salary is needed for a home.
Helping Hongkongers buy their own homes amid skyrocketing prices seems to be the focus of the latest government housing policy. Despite the increase in supply, the likelihood of interest rate rises and slower population growth, property prices in Hong Kong are still hitting record highs. The market has been affected by mainland companies pushing up land premiums and subsequently property prices.
The most pressing need for Hong Kong is to improve housing conditions for low-income earners and mitigate the mortgage burden for the middle class.
Hong Kong has a unique housing market. There are about 756,000 public housing units designed to provide low-income earners with affordable accommodation. These account for 29.7 per cent of all households. There is some subsidised housing (20 per cent) and the remaining 50 per cent is privately owned.
The Kwai Chung Subdivided Flat Residents Alliance urges the government to set a minimum living standard, on October 31. The NGO’s suggestions were based on a checklist of 10 basic living criteria put forward by subdivided flat residents. Photo: Naomi Ng
However, mobility or turnover of public housing tenancy is very low, despite improvements in the economic situation of tenants. There are about 26,000 tenants whose income falls within the top 20 per cent bracket. They are paying the “penalty rate” of two to three times the basic rent. However, this only accounts for about 5 per cent of their household income.
On the other hand, households at the bottom 20 per cent income bracket have to give up more than 50 per cent of their earnings in the private rental market, for a demeaning living environment. For public housing, rental expenditure has been kept at about 10 per cent of income level. Due to the unaffordable private market and the relatively low wage level, there are still 277,000 applicants queuing for public housing in 2017.
The average waiting period for a public housing flat is already more than 4½ years. The very demeaning living conditions for low-income households in subdivided flats would certainly have an adverse effect on their mental well-being, especially for children.
It is important to have an infrastructure to triage rich public housing residents to move out, and redeploy these resources for the more disadvantaged.
If doubling and even tripling the rental cost has no deterrent effect, perhaps a punitive rental level up to and even more than market rates may be considered. The additional income could be used as a form of rental subsidy for those in need and in the queue.
Hong Kong can come together to ease housing crisis
For the middle-income group, it seems 50 per cent of their income goes into housing expenditure, including mortgage payments. According to international practice, the housing expenditure to income ratio should be contained at not more than 30 per cent, whereas 40-50 per cent is commonly observed in Hong Kong. The excessive burden has had a direct impact on the quality of life and life chances. The mortgage burden has become a deterrent for creative and innovative career development, as stability is the primary consideration in job choices.
Hong Kong still has ample space for housing development; it is insufficient planning and lack of community consensus that is making us go nowhere. It is ironic that we are willing to defend the fringes of country parks from land use, while neglecting the livelihoods of the vulnerable and disadvantaged.
Hong Kong Council of Social Service chair Bernard Chan officiates at the NGO’s launch of a shared-housing project, on September 19. The scheme will provide cheap flats for poor families waiting for public housing. Photo: Edward Wong
Hong Kong is famous for its “can do” spirit. We should further promote our altruistic behaviour to help those suffering the most from the housing situation.
It is a shame to allow such deplorable living conditions to continue. For those who can, let them pay, whether they are rich tenants in public housing or overseas buyers in our property market.
Also, our economy needs to move away from overdependence on land premium income to sustain government expenditure. The whole community is paying a huge and unconscionable social price for this.
Paul Yip is a chair professor in the Department of Social Work and Social Administration at the University of Hong Kong
This article appeared in the South China Morning Post print edition as: Public housing policy is failing those most in need
