Letters | Why Hong Kong can’t clone Singapore’s housing strategy

Readers discuss the Hong Kong government’s land-sale-dependent revenue model, and the experience of living in a subdivided flat

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Potential buyers view models of flats to be built in Tuen Mun on August 9, 2020. Photo: Edmond So

Published: 11:30am, 18 Oct 2022

A poll by the Kwai Chung Subdivided Flat Residents Alliance released on August 5 has revealed that tenants living in such flats still face problems such as power disruptions, poor ventilation, and the absence of separate kitchens and toilets. The average living space of those surveyed was only 50 sq ft, half the size of a standard parking space.

Given that virtually all land in both Hong Kong and Singapore is state-owned and given that both places have a similar population density, why can’t the Hong Kong government simply clone Singapore’s successful land acquisition strategy? The answer can be summed up in one simple word: money.

The government cannot dispense with a major source of revenue – the land sales in which plots are auctioned off to private property developers. In 2020-21, when the city was hard hit by successive waves of Covid-19, land premium netted the government HK$88.7 billion (US$11.3 billion), accounting for 15.7 per cent of the total revenue of HK$564.2 billion. Stamp duty brought in HK$89 billion, 15.8 per cent of total revenue.

Given that the government is so heavily reliant on selling land to private property developers, opting for Singapore’s model would be detrimental to its financial stability.

Singapore introduced the Land Acquisition Act in 1967 to prevent landowners from making unreasonable profits from land acquired for public development. The city state has a home ownership rate of 90 cent, with income ceilings for first-time buyers of Housing Development Board (HDB) flats and a minimum occupation period which must be completed before a flat is sold.

Singapore’s financial stability is not anchored to land sales. It is also more open to taxing the ultra-rich. It currently taxes those earning income in excess of S$320,000 (US$224,279) at 22 per cent, but plans to raise the tax on those earning S$500,000 to S$1 million to 23-24 per cent from 2024.