Hong Kong housing

Hong Kong to increase proportion of new public housing to 70 per cent of supply target over next 10 years, minister Frank Chan announces

  • Split between public and private housing to be adjusted from 60-40
  • Change means government will set aside fewer plots for sale to private developers and keep more land for construction of public housing
PUBLISHED : Friday, 21 December, 2018, 4:15pm
UPDATED : Friday, 21 December, 2018, 11:26pm

Hong Kong’s public housing supply will be ramped up to account for 70 per cent of the target for the next decade, the government announced on Friday in a major policy change to provide more affordable homes.

The move is a departure from a policy adopted in 2014, where public rental housing and subsidised flats accounted for 60 per cent of the total housing supply target, while the remaining 40 per cent would be private flats.

The change means the government will set aside fewer plots for sale to private developers and keep more land to build public housing.

Lawmakers and housing experts welcomed the move to allocate more of the supply target for public housing, but expressed worries that, without increasing land supply, the government’s pledge would end up an empty promise. Market watchers also expressed concern that the policy would slow down the cooling of an overheated property market.

Secretary for Transport and Housing Frank Chan Fan, who is in charge of reviewing and updating a rolling 10-year housing strategy every year, said the move was made to reflect new housing demand projections and changes in public opinion.

“We’re talking about almost 270,000 applicants who are waiting for public housing … so making this adjustment to increase the ratio of public housing is in response to the society’s demands,” Chan said.

The shift towards public housing was first proposed by Chief Executive Carrie Lam Cheng Yuet-ngor in her policy address in October, as one of her measures to address a housing crisis in the world’s least affordable property market.

Demand for public sector homes has been keen. Families for public rental housing face an average wait of five and a half years for a flat. Housing projects involving the sale of subsidised homes have always been heavily oversubscribed.

Despite the rule change in favour of public housing, the secretary assured that the private property market would remain “healthy” in the short term because the supply of private flats would be at a “relatively high level” for the next five years, numbering 20,800 private flats each year on average, already a 50 per cent increase compared to the last five-year period between 2013 and 2017.

Hundreds queue for subsidised homes at 58 per cent knockdown

The housing chief also adjusted the total housing supply target downward from 460,000 to 450,000 flats in the next decade until 2028/29, mainly due to a slower growth in the number of households.

Under the new 70-30 split, 70 per cent of the 450,000 flats, or 315,000, will be public residential flats and the remaining 30 per cent, or 135,000, will be reserved for private homes.

But with the government running out of readily available plots, it will fall further behind in meeting its public housing supply target as it had so far identified only enough land to build 248,000 public flats. The shortfall would be 67,000.

Digging up Fanling golf course a preferred option to boost housing

While welcoming the move, the Democratic Party’s spokesman on housing policy Andrew Wan Siu-kin doubted that the government would be able to reach its ambitious new target.

“Without increasing the land supply, they’re never going to reach their target, let alone play catch up,” Wan said.

Since 2014, the government has never hit its target of building enough public flats. The public housing units provided in the past four years only accounted for 47 per cent of the actual number of homes built, falling short of the 60 per cent target.

I think this is very much a demonstration that the government is actually determined to resolve the housing issue in Hong Kong
Stanley Wong, Task Force on Land Supply

Starting from 2014, the backlog shortfall of public and private flats has already grown to 74,097, due to recurrent delays and a lack of readily available land.

Others felt that the change was more of a political message, and a policy that would take time to realise.

“I think this is very much a demonstration that the government is actually determined to resolve the housing issue in Hong Kong,” Stanley Wong Yuen-fai, chairman of a government-appointed task force on land supply, said.

Wong also said that in view of the shortfall, the government should consider his task force’s recommendations, due to be submitted by the end of this month, for boosting land supply.

“The government should embark on all land supply options that have gained majority community support simultaneously. We just do not have the luxury of time, even more so now, if we look at the [widening] gap,” Wong said.

The task force has finalised its report, which recommends eight options for building up the city’s land bank, including digging up part of the golf course in Fanling, reclamation, and utilising private farmland and brownfield sites – degraded farmland occupied by polluting businesses like waste recycling.

Land supply task force gives its backing to Lantau reclamation plan

Lee Wing-tat, chairman of the think tank Land Watch, agreed. “The government has no magic wand. They are going to have to go through some tough times for the next few years, before they will even see some results,” Lee said.

Chan said the government would seek other ways to catch up, such as building higher-density public housing estates and speeding up the land planning process.

Building density on new sites for public housing could be raised by 30 per cent if site conditions permit, up from a present cap of 20 per cent. The Town Planning Board would assess the sites case by case.