Change

In the period since 1997, there have been three CEs. Under the first CE Tung Che-hwa an ambitious housing development programme was adopted, with a target of 85,000 new housing units per year to raise the stock by 40 % over a decade, of which a majority was to be public. This was a response to the perceived shortfall and overheating in the market in the late 1990s. However, the timing proved unfortunate, coinciding with the onset of the Asian financial crisis, and by the early 2000s house prices had plummeted by 30 %. For Hong Kong, the economic downturn was prolonged by factors such as the SARS epidemic and general economic restructuring. With significant actual and planned supply in the pipeline, moves were then made to stop public building programme and land release and, at the request of the private development industry, to suspend the Home Ownership Scheme from 2002.

Under the second CE Donald Tsang (from 2006) the emphasis shifted towards encouraging economic development including by becoming more responsive to developer interests and perspectives. More emphasis was to be on privately promoted housing, and the land disposal process was modified to an approach where the land authority published a long list of potential sites and developers registered an interest with a minimum bid, which might then trigger an auction. In practice land sales ran at a low level. In addition, there was a reluctance to address housing supply as the immediate concern was to see prices rise again. A review of the long-term land development programme in 2007 argued that there was not a great unmet need, for example, for new town designation, although some smaller New Development Areas (NDAs) were identified.

The third CE Leung Chun-ying took office from 2012, by which time evidence of a renewed housing price boom and inadequate supply was becoming inescapable, and housing supply became important once more.

A new Long-Term Housing Strategy (LTHS—Hong Kong Transport and Housing Bureau 2014) was commissioned, whilst shorter-term measures to cool housing demand through adjustments to stamp duty were introduced. These included a 15 % ‘flip tax’ on resales within 6 months (introduced in November 2010), a doubling of to 8.5 % for properties worth over US$2.6m (October 2012), and increased stamp duty on purchases by foreigners to 15 % (February 2015). Media coverage of the housing market overheating/affordability issue and the problems of delivering enhanced supply was extensive in the period 2013—15 (e.g. Youqin 2013; Li 2015). The LTHS is a forthright and clear analysis of the quantitative need for housing and of the supply measures entailed in delivery. Remarkably, by international standards, the targets entail 60 % of the annual 48,000 units required to be public rented or subsidised home ownership, the latter comprising rather under a third of the headline ‘60 % public’ target. Thus, the HOS (restored belatedly in 2010) once again becomes a significant part of the picture.

The context for this is the evidence that Hong Kong has become one of the most ‘unaffordable’ cities in the world, with prices rising strongly and amongst the world’s highest when considered against median incomes (Table 8.1). In addition, the standards of housing space consumption are relatively low for HK residents, especially for a medium/higher-income economy; they are now significantly lower than in comparable mainland Chinese cities. This contributes to a growing dissatisfaction amongst the younger adult population, compounded by the fact that many cannot afford to get access to any form of independent housing unit, or enter the aspirational home ownership ladder.

That the HK Government has responded with a very positive strategy more recently is indicative of a system which is capable of responding to popular pressures and concerns. However, academic commentators point out, more critically, that for a considerable period the government took its eye off the housing ball, neglected long-term supply issues for almost a decade, and were too ready to succumb to the lobbying of developer interests. Whereas up to the 1990s the government had a dominant position in land supply, the current position sees that having been diluted by a combination of changed disposal arrangements (giving effective control of some sites to developers), a relatively oligopolistic sector, engagement

Table 8.1 House Prices as a multiple of annual median household incomes 2014/2015

Country

Range

Singapore

3-5

USA

4-5

Canada

5-6

New Zealand

6-8

Australia

6-8

England

8-10

Hong Kong

14-16

Sources: Statistics Singapore; Housing and Development Board 2014; US Census; JCHS 2015; Statistics Canada 2014; Canada Real Estate Association 2014; Statistics New Zealand 2015; Real Estate Institute of New Zealand 2015; ABS 2015; Department for Communities and Local Government 2015 Hong Kong Census and Statistics Department 2015

of developers in optioning agricultural land and the handing over of substantial land assets to the MTR (which has its own priorities). Some argue that the government lost credibility in the early 2000s, at the time of the previous crash/recession, and never fully recovered a position of confidence—a ‘political lame duck’ was how one put it. This accounts for some of the shortcomings of the period 2004—2012, and some continuing problems in addressing long-term land supply, discussed further. Others put a major emphasis on the ‘growth coalition’ character of the Hong Kong Government and its closeness to major developers, as well as real estate’s importance within the HK Stock Market, in leading to the over-deferential stance towards developers.

 
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