Housing supply crisis awaits Hong Kong in next three to four years, in both public and private sectors, warns think tank, as land shortages bite

Both public and private housing supply in Hong Kong will plunge off what a think tank has described as a “supply cliff” in the next three to four years, as the building of flats has been hampered by delays and a lack of land. To alleviate the shortage, the Our Hong Kong Foundation suggested the government prioritise and rezone 25 sites for housing, develop brownfield sites and private rural land in the New Territories, and turn to reclamation. An annual average of 18,500 private sector flats will be completed between this year and 2023, an 11 per cent drop on last year’s estimate, according to the foundation, which was set up by former chief executive Tung Chee-hwa. But the think tank warned that the five-year drop in supply by 2023 would be almost 40 per cent, with only 13,300 flats coming on the market that year. It based the findings on stocktaking figures from private developers’ current projects. The foundation’s head of land and housing research Ryan Ip Man-ki said: “We are running out of available land. It is not a coincidence that both private and public housing supply is going to [drop off] a ‘housing cliff’ in three to four years time.” One of the reasons the foundation lowered its estimate was the government’s announcement last year that it would increase the proportion of new public housing to account for 70 per cent of the supply target. Why reclamation, not public housing, is the path to solving the housing crisis By adjusting the public-private ratio from 60:40 – which had been adopted in 2014 – the government also reallocated for public housing nine sites that were originally intended for private homes. Another reason for the downward revision was because construction work slowed last year. The number of superstructure projects starting slid 44 per cent year on year to only 12,600 flats in 2018. Flats are completed about two to three years after superstructure work begins. Officials are struggling to find ways to curb the city’s housing shortage and to ramp up the supply of affordable homes in one of the world’s most expensive cities to live and buy property. The government, which updates a 10-year forecast annually, has set a target of building 450,000 public and private flats by the 2028-29 financial year. It has said the supply of private homes in the next few years would still be at a “relatively high” level, as it marked a 20 per cent increase compared with the annual average in the past five years. On the public housing front, the foundation forecast 18,300 flats per year would be completed in the next four years. The supply will drop significantly to 14,500 flats in the 2022-23 financial year, down from 27,100 in 2018-19, according to the foundation, which based its prediction on Housing Authority figures. Stephen Wong Yuen-shan, the foundation’s deputy executive director, said this was because the government relied heavily on rezoning plots of land for residential use – a time-consuming process prone to delays. “Unfortunately we haven’t [created any new towns] in the past 10 or 20 years, so we have resorted to a way of providing residential land that is not so ideal, and we have no other choice,” Wong said. The rezoning process typically takes four to five years. This does not include the time needed to build houses, which takes another several years. Government has ‘grossly underestimated’ demand for new homes About 73 per cent of public sector flats in the next five years will be built on rezoned land, and thus the foundation expects to see more delays in public housing completions. The foundation suggested prioritising 25 sites to be rezoned for residential purposes. Three on Shek Pai Street in Kwai Chung and one behind Chai Wan Swimming Pool are all located close to transport and infrastructure in nearby housing estates. Other measures include expediting rezoning processes for 110 hectares of brownfield sites – degraded agricultural land occupied by businesses such as warehouses and container storage facilities – and 150 hectares of private rural land in the New Territories. Proposed HK$1 trillion East Lantau Metropolis is the answer to Hong Kong’s future land needs Democratic Party lawmaker Andrew Wan Siu-kin, who also sits on the Housing Authority, said allocating more resources for public housing was bound to have an impact on private homes. “This is an impact that the private sector can bear,” Wan said. “With limited land available, it’s all the more important to identify what is the priority. The shortage of public housing is a lot more dire and I believe increasing public homes is justified, given the greater interest.”

Housing supply crisis awaits Hong Kong in next three to four years, in both public and private sectors, warns think tank, as land shortages bite

Our Hong Kong Foundation says supply of housing stock will plummet by 40 per cent by 2023 The foundation recommends the government use rezoning, brownfield sites and land reclamation to loosen up supply

Our Hong Kong Foundation says supply of housing stock will plummet by 40 per cent by 2023

The foundation recommends the government use rezoning, brownfield sites and land reclamation to loosen up supply