Uphill homes battle becomes a lot harder

As Hong Kong’s crazy property market continues with its gravity-defying surge, aspiring homeowners can only look on in frustration and despair. The news headlines have, once again, reaffirmed the city’s dubious distinction of having the world’s most expensive real estate market. The government’s latest tightening of rules on mortgage lending, on the heels of previous “spicy” measures, has had little effect. They only underscore the huge challenges facing Chief Executive Carrie Lam Cheng Yuet-ngor, who has made affordable housing and home ownership her central policy goals.

A pair of flats at exclusive Mount Nicholson just sold for a combined HK$1.16 billion. At HK$131,500, that makes them by far Asia’s most expensive residences by square footage.

Many rich people, in Hong Kong and the mainland, are made even richer by an overly generous equities market. The Hang Seng Index has breached the 30,000 mark, its highest since the outbreak of the global financial crisis almost a decade ago. Historically, the property and stock markets reinforce each other in Hong Kong. So this may be a sign of the times, and a warning of danger ahead.

Down at the grass roots, 88,000 families are competing for 620 newly released subsidised homes, a record of 141 applicants fighting over every flat. The next batch of such flats under the Housing Society will not become available for another three years.

While the private market becomes more and more unaffordable, discounted government-built flats are not being released fast enough to meet bottled-up demand. In her maiden policy address, Lam pledged to create a Starter Homes scheme to increase home ownership for first-time buyers. It’s not clear, though, how she plans to fulfil her ambitious goal of raising the ownership rate from the current 50 per cent to 70 per cent. This will require shifting emphasis from rental property to home purchase at a time when private flats are unaffordable and subsidised ones are unavailable.