Here’s how to make Hong Kong homes affordable: just decide who gets what and why
Can homes in Hong Kong become affordable if they are based on “purpose of purchase”?
To begin with the economics, home prices should be governed by demand and supply, and looking at the shortage of land in Hong Kong, the prices of homes are bound to rise in perpetuity (“Hong Kong home prices rise for 25th straight month”, May 31).
The Hong Kong government appears to be trying its best to make homes affordable for Hong Kong residents, but its measures have not been effective enough.
I think the dynamics of pricing a home requires a complete change to solve this problem. The price of a home should be based on “purpose of purchase”: that is, we must set quota restrictions in residential projects.
“A” category homes should constitute 75 per cent of the units and be reserved for those who are buying for self-use, while “B” category homes should make up the other 25 per cent, for buyers acquiring property for investment (including renting out).
Every flat of a development project should be categorised before it is launched in the market. The flats should be certified by the government’s Lands Department to have been fairly categorised, based on the sizes, floor locations and views of the homes available. For example: if there are four size choices available in a 60-storey building, then all types and floor levels of flats should be distributed according to the 75/25 rule.
Watch: Explaining Hong Kong’s housing crisis
There should also be rules restricting flat usage.
For example, “A” category flats should not be rented out within, say, the first seven years of purchase. During this period, it can be sold. Once sold, the seven-year restriction will start again, effective from the date of the sale transaction. If a buyer has lived in the flat for seven years, then it can be rented out from the eighth year onwards, but only by the original buyer.
Under this scheme, similar-sized flats will have two price tags – “A” pricing and “B” pricing. Prices in the two categories should be left to the workings of demand and supply.
By doing this, we will distinguish self-use homebuyers from the investment-oriented buyers, which should help bring back affordability to the Hong Kong housing market.
Of course, the percentage and the seven-year lockdown period specified are just for illustration. Any such rule should be based on thorough market research.
Sameer Bhambhani, To Kwa Wan