Hong Kong’s housing crisis can only be solved through greater land supply
In his article of May 10 (“Hong Kong can solve its housing problems without finding more land”), Ian Brownlee stated that “increasing the supply of private housing will not reduce prices. Academic research has shown that for more than 30 years, there has been no correlation between housing supply and prices”.
It seems mainstream supply and demand economic theories do not apply to the Hong Kong housing market! This is, of course, nonsense. The research, to which Mr Brownlee and others refer, simply shows that short-term changes in housing prices are due to factors such as interest rates and the state of the economy. Short-term changes in supply are always minor in comparison.
The lack of correlation is true but Mr Brownlee misses the point. Housing in Hong Kong has been in short supply for the last 30 years and in acute short supply for the last 15. It remains the underlying cause of our high property prices. I doubt that Mr Brownlee can find any academic who would dispute that point.
Watch: Hong Kong’s housing crisis explained
Mr Brownlee further states that, “Hong Kong is an expensive place to live, and a household should anticipate paying 45-50 per cent of their total income on housing.” But do we want our citizens to be forced to tolerate sub-par housing at the highest prices in the world? Do we want our businesses to pay the highest rents in the world? The Task Force on Land Supply is trying to improve matters. Mr Brownlee thinks they should give up because things cannot be improved.
The average person in Hong Kong enjoys only about 150 sq ft of living space, and 2.8 people live on average in a 400 sq ft flat. This is the average – many are worse off. The Business and Professionals Federation feels this is a disgrace for a rich society.
The quality and quantity of housing in Hong Kong are an embarrassment. The government should pay no heed to those that argue against land development.
For the sake of the people of Hong Kong and the city’s economic development, they should set goals for land development significantly in excess of the goals in the task force’s report.
Victor Apps, chairman, Business and Professionals Federation of Hong Kong