Time for action, not just debate, in tackling Hong Kong’s housing crisis
Chief Executive Carrie Lam must show she means business and, with 9,000 unsold flats across the city, a punitive vacancy tax would be a good way to start
The government is caught in a dilemma. It wants to bring down property prices, but land and flats keep selling at record-breaking levels. Housing has become the most serious policy challenge for the city’s top officials.
It is surely an absurd and jaw-dropping moment when a parking space sold earlier this month for HK$6 million, or HK$44,444 per square foot. Meanwhile, a plot of residential land was recently sold to Sun Hung Kai Properties at the former Kai Tak airport site for HK$25.16 billion, making it the city’s most expensive land parcel.
Such public land sales are unfortunately procyclical. While they boost flat supply in the private market, they also serve as benchmarks for future land sales, thereby helping to keep prices high and unaffordable to many would-be buyers.
The government’s dilemma presents two sets of inequity. On the one hand, the private market now favours existing flat owners and cash-rich buyers while pricing out most of those aspiring to own a home. The rise in prices in the secondary market for the 25th consecutive month in May reflects that. On the other, despite a severe shortage of land for public housing, the government can still find prime sites to sell to the most well-funded developers.
The former means private homebuyers are increasingly being forced to buy overpriced, so-called micro-flats that are usually too small for a couple, let alone a family. The latter problem means the queuing time for public housing is now more than five years, the longest in almost two decades.
For Chief Executive Carrie Lam Cheng Yuet-ngor, the very legitimacy and success of her government now depend on tackling housing affordability and land supply. At some point, she will have to bite the bullet and commit to solutions bound to upset some special interest groups or others.
To cool down, the market needs to see concrete measures are on the way. Dubbed the great debate, the five-month public consultation launched by the government-appointed Task Force on Land Supply is entering the second stage with its offer of 18 options.
But so far, the land debate has been just that – a debate. Sadly, given today’s political climate, it would be next to impossible to achieve a consensus on the way forward. The most the task force and its consultation may achieve is to identify options that could be least disruptive, yet maximise land supply as much as politically feasible. The government must have the courage to commit to a policy and take speedy and determined action.
As a start, the government is at a final stage of studying a property vacancy tax. Given an estimated 9,000 unsold flats across the city, such a tax, provided it is punitive enough, will have an impact. Lam must now show her government means business.