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Hong Kong housing

For now, there’s no shame in Hong Kong being a ‘city of public housing’

Albert Cheng says public housing should be built on a large scale, though the failure of Chief Executive Carrie Lam’s six measures to cool Hong Kong’s housing market highlights the need for the government to follow Singapore in delinking public housing prices from the private market

PUBLISHED : Friday, 10 August, 2018, 6:00am
UPDATED : Friday, 10 August, 2018, 6:04am

The Centa-City Leading Index, a gauge of the secondary housing market, hit a record high last week, having risen for over 20 months in succession. Around a month after Carrie Lam Cheng Yuet-ngor announced six new measures to address the housing crisis, thousands of people queued up outside the sales venue of a new private housing estate in Yuen Long for a chance to buy one of the 328 flats on offer, at a minimum of around HK$4 million.

This is solid proof of the ineffectiveness of Lam’s new measures and the consultation on land supply. Even the proposed vacancy tax on unsold newly built flats has not dampened property prices.

Financial Secretary Paul Chan Mo-po has only taken half a leaf out of other countries’ books. A vacancy tax has been effective in Vancouver because the tax does not only apply to new flats, but all homes except principal residences or homes rented for at least six months of the year. All homeowners are required to submit a declaration to qualify for the exemption. This is the right way to tackle the housing problem. If not, developers will use loopholes to escape the vacancy tax.

Amid this, Ronny Tong Ka-wah, an Executive Council member, has picked a fight with Stanley Wong Yuen-fai, chairman of the government-appointed Task Force on Land Supply. Tong slammed the task force for putting too much focus on public housing, saying “nobody wants Hong Kong to become a city of public housing”.

In response, Wong pointed out that the government’s long-term housing plan aims to build 280,000 public housing units in the next 10 years and that currently the city is still short of around 30,000 flats.

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This disagreement on housing policy between two key members of the government’s circle is worrying. It reveals that Lam has failed to guide her team into a consensus and that she is not determined to solve the city’s housing problem.

After all, she is only following the footsteps of her predecessor Leung Chun-ying in trying to rebuild the property ladder. In the name of enabling Hong Kong people to own a home, this approach will only ensure the housing market remains overheated.

It looks like the government is going to use the report of the task force to legitimise the two preset final options – land reclamation and public-private partnership.

It is not the government’s responsibility to help Hongkongers buy houses. However, the government should guarantee that people are properly sheltered. The only solution is to speed up the building of public housing as well as to expand its scale. To keep the private housing market stable, it should be segregated from the public housing sector.

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Negatives aside, Carrie Lam’s proposal to partially delink the price of subsidised flats from the market price is a good start. However, if the price of subsidised flats is to be set with reference to the private market, housing prices as a whole will continue to rise.

The government should delink subsidised housing from market prices and set the rate according to construction costs

The government should completely delink subsidised housing from market prices and set the rate according to construction and operating costs. If not, Lam will be making the same mistake as her predecessor, which is to increase the demand for subsidised housing while failing to expand supply.

The government should build public housing on a large scale. A rent-to-buy scheme should also be adopted, which all permanent residents should be eligible for. The government can build public housing of different sizes and layouts, such as duplex flats. However, the resale of such properties should be restricted. Some of the proposed conditions are the occupancy span and that these flats can only be sold to permanent residents.

If the government is looking for a way to sustain the free market as well as to make sure people are well sheltered, the Singaporean way is the only way out.

Albert Cheng King-hon is a political commentator. [email protected]