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Hong Kong housing

Expectations over Lam’s housing policy raised even further

As the chief executive raises the option of delinking the prices of subsidised housing from market values to make the units more affordable, the pressure is growing on her and the Housing Authority to come up with a well thought out approach for implementation

PUBLISHED : Monday, 16 April, 2018, 1:44am
UPDATED : Monday, 16 April, 2018, 1:44am

Chief Executive Carrie Lam Cheng Yuet-ngor was frank to admit that efforts to tackle the city’s housing crunch had fallen short of public expectations. She said the government was willing to explore the option of delinking the prices of subsidised housing from market values to make the units more affordable. Welcome as they seem, her remarks are set to raise expectations further. Pressure is growing on her and the Housing Authority to come up with a well thought out approach for implementation.

Lam’s response came as scores of prospective buyers rushed to beat the application deadline on Wednesday for the latest batch of Home Ownership Scheme flats up for sale. Lam must be feeling the heat. The top leader has already been in office for 10 months. While much has been said and done to address the housing problems, property prices remain out of reach for most people. The lack of results does not square with her image as a can-do leader.

Pricing formula for Hong Kong’s government-subsidised flats up for review, city leader says

With more than 140,000 hopefuls vying for some 4,400 flats, the response is the most enthusiastic since the resumption of ownership scheme sales. This is unsurprising given the latest batch comprises two urban prime sites. However, these units are not cheap, with some selling at more than HK$6 million. But since the prices are pegged to a certain percentage of market rates, they already are considered a bargain by many homebuyers.

This raises questions on whether subsidised flats should be linked to the private market. There have been suggestions that the government should just charge the production costs. Speaking at her question time with lawmakers, the chief executive said she was willing to study the feasibility of delinking ownership scheme prices from market rates, although she did not elaborate.

In theory, any move that makes property more affordable is to be welcomed. But it involves a host of practical issues, such as the need to adjust the corresponding income and asset limits for applicants, and possibly tighter restrictions against reselling.

Also worthy of concern is whether it would fuel artificial demand. Lowering the price further may just attract more applicants to a still limited supply of housing. The more enthusiastic the response, the bigger the disappointment for those who lose out in the allocation.

Like her predecessors, Lam’s commitment in tackling the housing conundrum is beyond question. Her rich experience in public administration and her can-do style have raised expectations even higher. However promising election goals may sound, the government is to be judged by results. We trust Lam does not need another record application to remind her that her housing policy is increasingly being put to the test.