As pressure piles on leader Carrie Lam to fix Hong Kong’s housing crisis, will new measures do the job? Unlikely, critics say
Insider close to policymaking process says chief executive could face criticism if she did not propose a resolution that decisively tackles city’s housing woes
Chief Executive Carrie Lam Cheng Yuet-ngor’s announcement on Friday of six new measures to tackle Hong Kong’s housing problems comes at a time when public pressure for more affordable housing is piling on her. It is also no coincidence that they were delivered on the cusp of her first anniversary in office.
At first glance, the new initiatives may signal the government’s determination to tackle housing problems but critics suggest their effectiveness may be in doubt.
Speaking to the Post before the announcement, an insider close to the policymaking process said Lam could face criticism if she did not propose a resolution that could decisively tackle the city’s housing crisis. “The chief executive is coming up to one year in office, both she and society feel pressured by the rising property prices,” the source said.
Such a view was echoed by Democratic Alliance for the Betterment and Progress of Hong Kong deputy chairman Horace Cheung Kwok-kwan, who is also a member of the Executive Council, Lam’s cabinet.
He said the government should know well that “every citizen” in Hong Kong was feeling weighed down by housing difficulties.
Cheung added that the public expects Lam to implement “substantive” policies after spending a year in office: “It is time to directly address [housing issues], instead of just talking the talk.”
Boosting home ownership may be a major thrust of Lam’s housing policy but thus far she has desisted from setting a hard target. A starter home scheme was announced last year to help those who cannot afford a private flat but are too well off to qualify for a subsidised unit. But the big announcement was followed by a small number – only 1,000 flats in Kwun Tong were promised before the announcement on Friday. The government also regularised a pilot scheme that sells public flats to tenants.
Yet, these piecemeal efforts have meant the government has failed to rein in private property prices, which are linked to the price of subsidised flats.
Critics are also not optimistic that the Task Force on Land Supply will reach a consensus among various stakeholders on solutions to increase land supply. As it is, waiting times for a family to get a public rental flat have already increased to more than five years, because of a dire land shortage.
Lam’s predecessor, Leung Chun-ying, mapped out a long-term housing strategy of a 10-year target for the supply of both public and private housing. Leung also launched more than a dozen housing measures in the first six months after he took office in 2012, including a 15 per cent stamp duty imposed on non-local and corporate buyers.
Asked if Lam could be facing pressure from Beijing, the source said the pressure could be “in spirit”.
“President Xi Jinping has said that ‘houses are for living in’, I believe the central government is also concerned with the housing issues in Hong Kong,” the source said.
In a rare move, Lam led a presser to release the six new housing initiatives on Friday. Sitting alongside her were Financial Secretary Paul Chan Mo-po, housing minister Frank Chan Fan and development minister Michael Wong Wai-lun, putting on a show of cabinet unity.
Apart from reforming the pricing mechanism of subsidised flats to make them more affordable, other proposals include imposing a tax equivalent to two years of rental income on vacant flats, reallocating nine sites originally earmarked for private flats for public housing, inviting the Urban Renewal Authority to build starter homes at Ma Tau Wai, imposing more stringent conditions on developers’ sales of uncompleted flats and forming a task force to help push ahead temporary housing projects launched by community groups.
But Lam, who made the announcement a day before the end of her first year in office, rejected the saying that she needs to score on her housing report card: “There is no political motive … it’s just because housing in Hong Kong is the most important, most complicated and most serious problem [to tackle].
“I’m announcing [the measures] when they are ready, there’s no need to wait for the policy address.”
But the moves have raised questions as to whether they can really tame the rising property prices and cater to the increasing demand for affordable flats.
Lam said the purpose of the package was not to suppress property prices.
“I don’t expect society to measure the effectiveness of this package by the trend of Hong Kong private residential prices,” Lam said.
“But of course I hope that we will not be seeing another upsurge in property prices, because that is really making private housing very unaffordable for the people of Hong Kong.”
She added that more measures will be rolled out later this year.
Veteran tax adviser Marcellus Wong Yui-keung said the level of vacancy tax – equivalent to two years of a property’s annual rental income – “just about hurts” and its effectiveness would depend on whether developers believed the market would keep rising at a rate of more than 5 per cent a year.
Chau Kwong-wing, a real estate professor at the University of Hong Kong, questioned the effectiveness of the new measures but described the announcement as a gesture to show the government’s determination to resolve housing problems.
“Without more land, lowering the price of subsidised flats is like making the lottery winners happier. That’s it,” he said. “Leaving fewer sites for private flats might also increase the price of private flats. The ultimate solution lies in increasing the land supply.”
For that, Lam has deferred the decision to a later date and to the task force. The question then is: will the cynicism among Hongkongers deepen, analysts ask.