Bold action needed to tackle housing crisis
In response to the question of whether the latest property-cooling measure — a 15-percent stamp duty — introduced by the SAR government last November has effectively curbed price rises, Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, told a Legislative Council panel on Monday that it was too early to tell whether or not those restrictive measures have been effective and therefore can be eased any time soon. Chan was right to be cautious, as home prices have resumed their upward trend and hit new highs recently after a short period of correction between late 2015 and early 2016.
The fact that home prices have kept rising over the past several years and have ranked as the world’s most unaffordable for local residents for the seventh consecutive year suggests that all those cooling measures adopted so far have failed to fundamentally dissolve the city’s housing crisis. This is because while the government has done a great deal to curb speculative demand, it has failed to boost supply significantly to meet robust demand.
It is a no-brainer that boosting supply is the fundamental solution to the housing crisis, whereas curbing demand is merely a Band-Aid. Unfortunately, the SAR government has been handicapped by interest groups, rendering it unable to increase overall market supply at a meaningful level.
One of the sad facts is that private developers now have more land resources at their disposal than the government does. Developers have been hoarding huge volumes of land in their land banks for decades. At times of crisis, such as during a famine, no responsible government would hesitate to punish any grain hoarders. Now that Hong Kong is confronted by a housing crisis the authorities have every reason to slap punitive taxes and penalties on long-held idle land.
Obsessive conservationists have also been doing Hong Kong a great disservice by simply objecting to any development project, particularly large ones. In many of these cases, their objections to development are merely knee-jerk reactions stemming from their faith rather than informed decisions based on scientific analysis or sound reasoning. A case in point is they abhorred even the mere suggestion of commissioning experts to do a feasibility study on developing some fringe areas in country parks which have low ecological value.
Hong Kong has enough land resources for economic development and housing its people. What we need is a strong political will to deal with interest groups effectively and forcefully. Unaffordable home prices have driven many first-time home buyers, particularly young people, out of the property market, depriving them of their hopes for homeownership and contributing to social grievances and fissures that are threatening the city’s stability. It is time for bold actions to be taken to solve the housing problem once and for all.