Opinion | John Lee must tailor policies to Hongkongers’ need for affordable housing

With solving Hong Kong’s housing crisis now a priority, the government cannot shy away from bold changes to free up land and speed up development

Policies that encourage developers to revamp old districts and build on idle land would quickly boost supply

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Published: 9:15am, 27 Aug 2022Updated: 10:55am, 30 Aug 2022

Chief Executive John Lee Ka-chiu and his new administration are determined to kick-start the city’s economic recovery after several years of significant constraints. Certainly, they face major and long-standing challenges. Among these, housing is top of the government’s to-do list.

Hong Kong’s housing unaffordability, coupled with its high cost of living, threaten the city’s livability. Home ownership is an impossible dream for many, with the median price-to-income ratio more than 20 times. Renting a home is also not without notable challenges. Nearly 150,000 citizens are on the waiting list for public rental housing, with the average waiting time exceeding six years.

Even the private rental market remains unaffordable to many. As our newly published Asia Pacific Home Attainability Index reveals, rent prices have surged more than 150 per cent since 2003 and accounted for 50 per cent of median household income in 2021. With societal factors compounding the severity of the housing issue every year, how should the new administration approach it?

Chief Executive John Lee visits a residential building in Yau Ma Tei on April 24. Photo: K.Y. Cheng

In his election manifesto, Lee highlighted the importance of tackling land and housing issues to create a better living environment and drive citywide prosperity. He established four core policies to help achieve these goals, including the streamlining of procedures and the pursuit of diversified developments.

While such remedies are a move in the right direction, additional innovative approaches are required to make real progress in meeting Hong Kong’s housing and urban regeneration needs.

Land scarcity is a lingering issue that keeps property prices high, yet determining a better way to calculate land premiums could attract industry players to build more fairly-priced developments.

Currently, no standard rates exist for land pricing before and after a new development is built, leading to inaccurate and unreasonable land premiums. Nor does the current pricing method take into account how a piece of land is currently being used.

It assumes a site is clear, and excludes the value (or cost) of any buildings or structures already there. This deters property developers from initiating projects in certain areas. Seeking ways to standardise land premium calculations could quickly free up more supply for housing.

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