Hong Kong can be seen to illustrate both market and policy adjustments to high house prices. Firstly, as predicted in classic urban economic theory, the built form is strongly biased towards high-density, high-rise housing. Secondly, as already mentioned, space consumption per household or per head is relatively low, given the income level of residents.
Thirdly, it may be observed that it is just as well that there is a large, effective public housing system, as many/most residents cannot afford to enter home ownership unaided. This frustration of aspirations by the younger generation is clearly of concern to the government, and may underlie some of the recent political unrest.
Land Supply Constraints
As in the 1990s, the Hong Kong Government clearly believes that housing supply should be expanded to help improve affordability, as is evidenced by the LTHS. However, the scale of supply increase is based on traditional demographic projections and need backlog numbers, not on an economic model of the relationship between house prices/affordabil- ity and supply—unlike the attempt to do this in England following the Barker Review (2004), via the national advisory body NHPAU.
The key problem facing the government, however, is to source sufficient land to drive supply up to the target level. This stems partly from the neglect of the supply pipeline through most of the 2000s and partly from the emerging ‘politics’ of planning for new housing developments. The former is a problem because, as is documented in the LTHS document, a realistic assessment of the time to deliver new major housing sites, not previously identified in the planning process, may take 11—13 years — see Fig. 8.1. In other words, if a site is not already part-way through this process, it cannot contribute to this 10-year action plan. This may seem excessive, and evidence of an over-bureaucratic planning system, but it may still be a realistic estimate of what it takes to ‘do it properly’ in a Hong Kong context, that is, from scratch, and not short-circuiting processes of community consultation, environmental and technical reports, infrastructure provision and recognising the environmental and topographical features of Hong Kong (building high-rise on steeply sloping or reclaimed sites in a location subject to tropical storms, with appropriate transport access and services, etc.).
What are the options to provide this larger scale of new housing supply in Hong Kong? Some argue for a return to the successful New Towns programme of earlier decades. Alternatively, medium-scale NDAs of up to
Illustration 8.2 Public and private sector housing in Hong Kong. There is a close spatial integration between the provision of public and private sector housing in Hong Kong. The geographical constraints of the island have dictated a very high- density housing form, with community and recreational facilities often provided on rooftops and podiums, with pedestrian access to the Metro line.
(Image credit: Nicole Gurran 2014)
Fig. 8.1 Major processes for land and housing development projects (Source: Adapted from Hong Kong Transport and Housing Bureau (2014) Long Term Housing Strategy: December 2014. p. 17)
10,000 units may be defined. But in either case the problem is to identify the best location for these, and to gain political agreement to proceed. Most of the key new towns of previous decades were built on reclaimed land on the foreshore of rivers, estuaries and bays—an expensive and time-consuming option, with less readily available sites than before (Ng and Cook 1997). Of the land area, 40 % is designated as country parks or green belt, and there is quite a strong lobby against encroaching on these. Clearly, it is important that a high-density city should have green spaces to provide ‘lungs’, views and recreational spaces, but that does not necessarily justify all of these designations, and indeed the Planning Board has considered a long list of smaller sites within these areas which it deemed to be suitable for housing, suggesting that such areas were not in principle sacrosanct. Thirdly, there is the extensive area of farmland within the New Territories.
These seem to be subject to considerable political sensitivity, with the Government finding it difficult to deal with the indigenous population (who actually may be more receptive), whilst migrant farmers from China, squatters and green environmental groups form a sort of NIMBY alliance, partly perhaps in the former case to drive up the compensation levels. A complicating factor is that developers have bought options on farmland in a land banking exercise, which may make site assembly more difficult and expensive. The last option is urban brownfield redevelopment, either of older lower-density housing or of former non-housing uses, including industry and transport (including the celebrated case of the former Kai Tak airport). Politically this option is more acceptable, but it tends to be associated with schemes that are long, drawn-out and complicated, with considerable community consultation, and driven by commercial pressures to be even more skewed to super-high-density, upmarket styles of development.