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Our Hong Kong Foundation says that the government’s target of building 450,000 flats over the next decade is not enough. Photo: Felix Wong

Government has ‘grossly underestimated’ demand for new homes, Our Hong Kong Foundation says

  • Group says government’s projections do not consider different generations of families forced to share flats
  • The organisation has called on authorities to revise methodology, saying the official target of 450,000 flats over the next decade is not enough

The demand for new homes in Hong Kong has been “grossly underestimated” by the government, a think tank has said.

Our Hong Kong Foundation, founded by former chief executive Tung Chee-hwa, said the city’s target of building 450,000 flats in the next decade was not enough.

It argued that the way the government calculated the need for homes did not take into account a “pent-up demand” caused by families who would have chosen to live separately if there had been an adequate supply of affordable homes.

The think tank said the average living space had shrunk for those in the private sector, as more people were forced to live together in cramped conditions.

It pointed to figures from the Census and Statistics Department, which showed the average household size for private rental units surged from 3.09 to 3.47 people per flat between 2006 and 2016. The increase in household size meant a slower net growth in the number of households.

Stephen Wong (left), deputy executive director and head of public policy institute, Our Hong Kong Foundation, and Ryan Ip (right), senior researcher, Our Hong Kong Foundation. Photo: Handout

In comparison, the average household size of public housing was 2.73 people per flat in 2016.

“What we see now is that a lot of Hong Kong families [living in private housing] are forced to live together, sometimes three generations together, because [the younger generation] have been unable to afford high rents or to buy property in the past 10 years,” said the think tank’s senior researcher Ryan Ip Man-ki.

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“This pent-up demand is not reflected in the government’s projection and therefore there is a gross underestimation of the housing demand,” he said.

The government, which updates a 10-year forecast annually, had reduced its construction target from 480,000 flats by 2025, to 450,000 flats in its latest projection that runs to 2029. It cited slower net growth in the number of households.

Hong Kong’s per capita living space of 160 sq ft per person, is one of the lowest in the region, falling behind Singapore at 270 sq ft per person and Tokyo at 210 sq ft per person. Photo: Martin Chan

Our Hong Kong Foundation researchers said the government’s current projection, based on past population trends, was problematic because it assumed people would choose to continue to live in cramped quarters as was the case for the past decade.

“The projection perpetuates a vicious cycle. If it continues to make the projection with that assumption, then it would continue to project fewer and fewer flats than we actually need,” Ip said.

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They argued that if people were given the choice to live separately with more space, the average household size would have dropped faster below the current level, resulting in a higher number of households and more need for homes.

The group called on officials to revise their methodology.

The think tank has supported the government’s bid to increase land supply through different means, including a massive land reclamation project, known as Lantau Tomorrow Vision, to the west of Hong Kong Island.

Applicants for the Sale of Home Ownership Scheme Flats 2018 pick up application forms. Photo: Edward Wong

Paul Yip Siu-fai, chair professor of population health at the University of Hong Kong disagreed that the official methodology was problematic, although he acknowledged the city’s red-hot property market had influenced normal demographic changes.

“All population projections have to be based on historical trends, because we don’t have a crystal ball … but indeed it is true that Hong Kong’s property prices have distorted and compressed a normal demographic housing transition,” Yip said.

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Stanley Wong Yuen-fai, who chairs the government-appointed Task Force on Land Supply, pointed out there was a need to look at the average household size for the city as a whole, noting the average household size in public housing was smaller.

Wong however agreed that the government’s predicted shortfall of 1,200 hectares in the next three decades, 230 hectares of which was for housing, did not include the city’s aspirations for its future generations to live in bigger flats.

Stanley Wong, chairman of the Task Force on Land Supply. Photo: Jonathan Wong

A spokesman for the Transport and Housing Bureau, in response to the Post’s inquiries, said that the Long Term Housing Strategy demand projection model “defines housing demand as the total number of new housing units required to provide adequate housing to each and every household over the long term.”

It did not respond directly to the foundation’s comment on whether it has underestimated the housing demand, but pointed out that the projection was not based only on historical trends, and also took into account forecasts of demographic changes, economic growth and property market situations in the coming decade.

It said it also factored in Hong Kong people’s wishes to live in more spacious flats, as one of the model’s key demand components accounted for the housing needs of those who are inadequately housed. This includes those living in subdivided flats, squatters and units in non-residential buildings.

Hong Kong’s per capita living space of 160 sq ft per person is one of the lowest in the region, falling behind Singapore at 270 sq ft per person and Tokyo at 210 sq ft per person.

Our Hong Kong Foundation also attempted to use another way to show there was “repressed housing demand” by comparing the number of flats built with the number of demographic events – first marriages, divorces, births and deaths – during the same period.

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It assumed each newlywed couple, divorce and birth represented the need for one more flat and each death represented the need for one fewer.

The results showed that in 2013 to 2017, for every net demographic event, only 0.44 flats were built.

Ip agreed there were limitations to this calculation, as, for example, in reality a couple may not need to move to a new flat after they have a child.

He said the foundation was trying to offer a more “unique perspective” in showing the unmet housing demands.

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