Carrie Lam turns words into action with ways to ease housing crisis
Proposals such as a vacancy tax on newly completed flats are unlikely to have a substantial impact on prices, but they do send out the right message
A rise in private flat prices in May for the 26th straight month has maintained Hong Kong’s unwanted distinction as the world’s least affordable property market. The news coincided with the unveiling of proposals to ease the housing crisis.
The announcement, ahead of Chief Executive Carrie Lam Cheng Yuet-ngor marking her first year as leader, reflects the pressure on her over housing, and ensures that her scorecard so far conveys a sense of urgency about the biggest issue for Hongkongers.
A vacancy tax on newly completed flats that remain unsold aims to discourage hoarding by developers and was widely anticipated, along with the building of affordable housing on at least six prime sites originally reserved for luxury homes.
The highlight, therefore, was further details on the delinking of government-subsidised housing prices from private market rates. Lam said they would attract a discount close to 50 per cent and, as a result, “people can be more reassured now”. Restrictions on resale would also be tightened.
Concrete measures are to be welcomed as offering hope for short-term relief pending long-term solutions, especially given that a public consultation launched by the government-appointed Task Force on Land Supply is unlikely to result in consensus on how to overcome a shortage, the root of the crisis.
We hope they will be effective. Sadly, on their own, they are unlikely to have a lasting substantial impact on housing prices, unless they become part of a bigger package of measures that includes solutions bound to upset one influential special interest group or another.
In this case developers have questioned the need for and design of the vacancy tax at twice the annual rental value of a flat. But, in reality, market demand and their power over supply and pricing under the present property regime enable developers to cushion any pain.
That said, the proposals do send the right signal, of a willingness to take concrete action that disturbs a cemented status quo or ruffles feathers. Nothing less will make any real difference, certainly not a consultation swamped with the views of special interest groups.
Property is now dividing Hong Kong, between existing owners and cashed-up buyers on one hand and, on the other, people who can only afford micro flats or who join the five-year wait for public housing.
The housing crisis is a hothouse for deep-seated social ills such as poverty and inequality. Ultimately, Lam will be judged on how she tackles home affordability and land supply. The consultation will at least identify options. The new measures show the government is capable of turning words into action.