Hong Kong real estate experts say housing balance needs shifting in favour of private sector

Hong Kong real estate experts have called for the private sector to play a bigger role in the provision of flats for residents and talent recruited from overseas, despite an economist’s warning about a further dip in property prices. Lau Chun-kong, a surveyor and managing director of real estate company Colliers Hong Kong, said on Monday the government should increase the proportion of private flats in the overall housing supply as the economy improved and residents became wealthier “When the economy gradually recovers, there will be a higher demand for renting and purchasing private property,” he explained. “Society will only be stable in the long run when supply has met these demands.” He was speaking a day after Bernadette Linn Hon-ho, the secretary for development, said the government would have some room to adjust the ratio after the waiting time for public housing dropped over the next few years. Public rented homes and subsidised flats under present government policy account for 70 per cent of new housing and the private sector supplies the other 30 per cent. But Lau said that despite the stagnant property market the ratio should be adjusted and sites reserved for private sector development as soon as possible because it required at least four years to take private residential projects from blueprints to completion. He added the government had to review its long-term housing policy and factor in an increased demand caused by an influx of talent, as well as build bigger flats to improve people’s quality of life. Lau said the government’s examination of a 50-50 public-private split in some new development areas earmarked for housing professionals from outside the city was a “pragmatic move”. The present ratio was set six years ago after the last administration spotted an increased need for public housing as waiting lists lengthened. The average waiting time for a public rented flat went up from three years in March 2014 to 5.5 years in December 2018. Public rented housing and subsidised flats accounted for 60 per cent of the housing supply target before the 70-30 ratio was adopted. The old ratio was adopted by the then administration in 2014 in line with a proposal from the now-disbanded Long Term Housing Strategy Steering Committee after public consultation. The government-appointed steering committee said the administration had to take the lead in increasing public housing supply while also ensuring a stable and healthy private residential market. Professor Chau Kwong-wing, the director of the Ronald Coase Centre for Property Rights Research at the University of Hong Kong, agreed adjustments should be made to the ratio as soon as possible as it could increase the amount of affordable housing on the market. “The government should have amended the ratio much earlier,” he said. “With public housing accounting for a large proportion, the little private housing supply brings rising property prices. “In the long run, the city’s housing supply should rely on the private market to operate and regulate … as long as you have provided enough land and private housing, the housing price can reach an affordable level.” Chau added that a fall in property prices could affect the economy, but society had to consider whether it was willing to take the hit to ensure affordable housing. He added the government could also counteract any downward trend in prices by methods such as slowing down land sales to control the supply of flats. Chau said focusing too much on public housing was inefficient as its turnover rate was low and people had to queue for a rented home or try their luck to get a subsidised flat. The average waiting time at present for a public rented flat is 5.7 years, and the latest subsidised housing releases are more than 18 times oversubscribed. But Andy Kwan Cheuk-chiu, an economist who was also a member of the steering committee, warned an increase in the supply of private housing would discourage buyers as they would hold off for a bigger flat supply and for prices to fall further. Kwan, the director of the ACE Centre for Business and Economic Research, said it could further deter developers from bidding on land in the future, which would have a knock-on effect on government income. “One move will affect the other … the government should rethink its long-term housing strategies by considering future economic factors and the impact of the city’s integration with the mainland,” Kwan added. He said more Hongkongers might move to mainland China because of its lower cost of living and that could also affect housing demand. Kwan suggested that the public-private ratio should only be altered when property prices stabilised and the average waiting time for public housing fell to less than three years, a target the government has promised to achieve.

Hong Kong real estate experts say housing balance needs shifting in favour of private sector

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Real estate consultant says government should increase proportion of private homes in housing supply as economy improves

Real estate consultant says government should increase proportion of private homes in housing supply as economy improves