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Hong Kong housing

Will Hong Kong ever hit its public housing target? Carrie Lam says yes, but city data suggests otherwise

Top official vows to increase proportion from stated 60 per cent goal

Analysts question target and point to recent record of building delays

PUBLISHED : Monday, 22 October, 2018, 8:00am
UPDATED : Monday, 22 October, 2018, 2:50pm

The Hong Kong government has never hit its target of building enough public flats to account for 60 per cent of the total housing supply, official statistics showed, even as the city’s leader vowed to reach a still more ambitious goal.

Chief Executive Carrie Lam Cheng Yuet-ngor’s pledge during her policy address to increase the proportion of public housing raised questions over whether it could actually be realised when the city was already playing catch-up on an accumulated housing shortage, or if it would eventually end up as an empty promise.

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Under the government’s long-term housing strategy, officials set a target of building 460,000 units by 2027/28. From this total, 60 per cent, or 280,000, would be public rental housing and subsidised flats, while the remaining 40 per cent, or 180,000, would be private flats.

However, data compiled by the Post showed the government failing to achieve the target of a 60:40 split every year since the strategy was adopted in 2014.

Across Hong Kong, 109,903 flats were built between April 2014 and March this year. Public housing flats only accounted for 47 per cent of the figure, while private flats comprised 53 per cent.

The latest statistics showed 28,324 flats were built in total between April 2017 and March 2018. Public housing flats only made up 48 per cent, with private flats accounting for other 52 per cent.

The closest the city came to the goal was between April 2015 and March 2016, when public flats reached 54 per cent of the total.

“It is a big problem. Whether it’s meeting the supply or ratio target, the government has failed in these two regards,” said Andrew Lam Siu-lo, who served on the steering committee that came up with the long-term strategy.

But according to government forecasts for housing production in the next five years, the situation will improve slightly, with public housing accounting for 49 per cent, based on official average annual projections in February.

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

Authorities in December admitted that the government only identified enough land for 237,000 public flats by 2027/28, which would lead to a shortfall of 43,000 units.

Lam explained that the 60:40 split was meant to be a directional guide, and whether the actual supply met the target was an entirely different matter.

“From construction to rezoning and public consultation, there are lots of roadblocks when it comes to developing land,” he said.

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“If any of the projects suffer delays, it’s going to have a knock-on effect on whether the ratio target can be met.”

In the past four years, the city’s public housing supply has been hit by constant delays, with an average of 83 per cent of public flats built each year having been postponed from their initial planned year of completion, according to the think tank Our Hong Kong Foundation.

Reasons for the delays include lengthy land resumption and clearance procedures as well as poor weather.

The chief executive’s vow came amid the longest waiting times for public housing in almost two decades. On average, families are on hold for more than five years and three months.

As of the end of June, there were close to 270,000 applications for public rental housing.

The commitment echoed calls from the community to adjust the ratio so that public housing would account for at least 70 per cent of the total.

In her policy address, Lam also promised that 70 per cent of flats built on any newly developed land would be for the public sector.

But Andrew Lam, from the steering committee, said there was little use talking about “how to cut the pie, when the pie wasn’t big enough in the first place”.

The housing supply will still lag behind if we can’t source land
Andrew Lam, long-term housing strategy steering committee

“She could pledge a 70:30 split or an 80:20 split, but it wouldn’t really have a big impact,” he added. “The housing supply will still lag behind if we can’t source land.”

Neon Yiu Ching-hei, of Liber Research Community, a local NGO focusing on land and development research, believed the chief executive’s words were “bound to be an empty promise”.

“The government has made all sorts of excuses and ignored short-term options such as using underutilised government sites, military sites and brownfield land, while only focusing on reclamation, which won’t increase land supply until 20 years later,” Yiu said.

However, experts said it was necessary for Carrie Lam to make the pledge despite not being able to meet flat production in the short term.

“If she didn’t make that pledge, the supply of public housing might even lag behind more in the future,” said Lee Wing-tat, chairman of think tank Land Watch.

Lee believed that while it was unlikely for the government to be able to catch up in one or two years, it would be possible to increase the public housing proportion to at least 60 per cent in five to seven years’ time.

 

Lam could reach her target through several ways, he added, such as reallocating more land originally earmarked for private housing to build public flats, increasing the plot ratio to allow building at a higher density, and following through on the government’s “land sharing” scheme, which would allow developers to build on their farmland as long as a certain proportion was set aside for public housing.

As for the private sector, Lee said that even if the government sold less land to developers, they could start dipping into their own land banks or expedite building processes, noting they had to answer to their shareholders.

“With the current aim of a 60:40 split, we end up only achieving a 50:50 split,” he explained. “So if she aims for a 70:30 split, maybe she’ll be able to get a 60:40 split.”

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“She doesn’t have a magic wand to make land appear. To be honest, if she’s able to achieve an actual 60:40 split, she’ll have already done a really good job.”

Stanley Wong Yuen-fai, chairman of the government-appointed Task Force on Land Supply, expressed confidence that the body’s public consultation would come up with a multipronged solution.

“It will not be an empty promise. It will be backed by a number of options on how and where to source land in the short, medium and long term,” Wong said.