Is a government scheme to boost Hong Kong’s public housing accidentally pushing up home prices?
- Analysts say a recent move by the government to boost affordable housing may have pushed private home prices even higher
- An average sized flat in Hong Kong now costs US$840,000, three times the price of a similar unit in New York
It may have been well meant, but the Hong Kong government’s latest move to take the heat out of the property market may have had an unintended consequence.
In an attempt to raise the supply of affordable housing, the government recently shifted the targeted split between public and private housing to a 70:30 ratio from the previous 60:40. The change was announced on December 21 last year, which was followed by a rebound in Hong Kong property prices in January this year.
With desperate home seekers now scrapping over a diminished private market, the plan may have contributed to a rally which has taken prices in the world’s most expensive property market to even greater heights, say analysts. Hong Kong home prices have hit an all-time high after staging a record-breaking comeback, new figures show.
“The intention is good, however, it translates to an even smaller pool of private homes,” said Alvin Cheung Chi-wai, associate director at Prudential Brokerage.
“Buyers are having to rush to snap up a unit as they are afraid that private home prices will be pushed up as the supply will be further decreased. And the [Hong Kong] government sets the income cap for public housings too low, and not many home seekers can actually benefit.”
Many observers believe the good intentions of public housing schemes have been undermined by their flawed implementation.