What must Hong Kong do to rein in surging home prices?
Panel discusses challenges and ideas ranging from taking on powerful groups to a need for socially innovative solutions
Hong Kong’s home prices may be surging from one record high to another, but the prospect of reining them in over the next decade may not be as far-fetched as sceptics make it out to be, according to experts.
Price corrections however, will also depend on external factors such as US interest rate rises, mainland Chinese and US economic conditions, and the city’s own housing supply strategy.
That was the main takeaway on Wednesday from the South China Morning Post’s fifth “Redefining Hong Kong” debate series, titled: “Can Hong Kong rein in runaway housing prices?”
“Hong Kong is an open economy and a very small place. If you look at the price corrections the past three or four times, it was mostly caused by external factors,” Buggle Lau Ka-fai, chief analyst at Midland Realty, said.
“The day the US starts increasing interest rates by large amounts and the mortgage rate goes up, together with a not-so-good economy and [expectations of an] increase in [housing] supply, property prices will come down. But we don’t know when that will happen. It’s the million dollar question.”
With external factors influencing demand out of the government’s control, Hong Kong has been focusing on ramping up land supply and flat construction.
The official target is to build 280,000 public and 180,000 private flats up to 2027. Last year, the government conceded it would not meet the former mark, due to difficulties securing land.
Chief Executive Carrie Lam Cheng Yuet-ngor has created a new task force to evaluate options to boost supply, such as building on the fringes of country parks and large-scale sea reclamation.
But veteran campaigner Lee Wing-tat, of the Land Watch think tank, said it was not about the lack of land resources but a lack of consensus on which sites to use and prioritise.
The former Democratic Party chairman was the only panellist who was sceptical about getting a grip on property prices, noting the government’s reluctance to take on powerful vested interests.
“The problem is not that there is no land,” Lee said, pointing to some 2,000 hectares of underutilised brownfield sites and 1,500 hectares of privately held village land across the New Territories.
“They are all in the hands of big developers, indigenous villagers and village chiefs,” Lee said. “Can [Carrie Lam]overcome the interest of these powerful people? Unless we make some fundamental changes, the situation will not change.”
Dr Yanto Chandra of City University’s department of public policy called on the government to adopt more socially innovative solutions to increase supply, such as working with social enterprises to lease safe and affordable housing to the poor.
“There’s too much finger pointing. We should start working together to solve problems,” he said.
Colin Arnott, head of research at Waters Economics, pointed to changing demographics – average household sizes have fallen from 3.9 people in the 1980s, to just 2.8 today.
The 1980 level today would entail “700,000 fewer units” needed for the same population, he said. “The government must address that changing social structure.”