Patience urged

Although the government is increasing land supply to alleviate city’s housing woes, it perhaps should look at a certain balance between public and private housing to produce more resources for public housing units. Sophie He reports

Although the government is increasing land supply to ease the city’s housing crunch, there could be other ways to produce more resources.

High home prices are widely accepted as an unavoidable grievance in Hong Kong. But it is an issue the government must address in its declared efforts to make this city of more than 7 million people a more “livable place”.

In the past several months, the government has laid down the roadmap to increase the supply of “affordable” housing and introduced various administrative measures to try to dampen rising prices. Although these measures have hardly made a dent on the overheating marketplace, many economists and social analysts have expressed confidence in the longerterm plan, believing that increased supply would eventually ease the price pressure buildup.

“Compared to other large cities in the world, Hong Kong is actually pretty good, in terms of our medical standard, education quality as well as our air quality, (but) the city’s major problem is its high residential prices, which not just affect the living quality of Hong Kong people, but also does not help us to attract overseas talents,” Chinese University of Hong Kong (CUHK) Economics Department Professor Chong Tai-leung told China Daily.

Chong said that the government is increasing the land supply for the housing market but Hong Kong people would need to exercise patience for maybe three to four years more for its plans to take effect.

Hong Kong people are always complaining about the expensive home prices as well as their living condition because they are indeed suffering.

Since 2008, housing price in Hong Kong have increased by an average of 15 percent every year while the average household income in the city has increased by less than 4 percent every year, Joanne Lee, manager of research and advisory at Colliers International Hong Kong, told China Daily.

According to a Jones Lang LaSalle research paper, based on the average household income and home price in Hong Kong, a family needs to pay every dollar they earn over a 15-year period for a house, not including any mortgage interests. Waiting list

“The expensive residential price in Hong Kong is a result of imbalanced supply and demand,” said Lee, explaining that after all it is a small city with a relatively large population.

Aside from the supply shortage, which has been a long term issue, high construction costs also provide support for expensive home prices, Lee added.

“A major part of construction costs are the wages of construction workers. The situation actually has worsened in recent years as the government has launched several key infrastructure projects in the city,” she said, adding that the labor shortage in the construction market has pushed the workers’ wages even higher.

Meanwhile, the number of people who are on the waiting list for public rental housing is at a record breaking level of over 250,000 at the end of June.

Although the average waiting time for general applicants was three years, it is widely believed that the waiting period will soon be over three years.

Joseph Tsang, managing director at Jones Lang LaSalle, told China Daily that in order to make Hong Kong a more livable city where people feel a little bit happier about their living conditions, he agreed with the government’s idea of increasing supply in housing market to make this happen.

The HOS units should only be available for people and families who currently live in public rental housing units. Only then will more people move out of the public rental housing units to allow more people on the waiting list to get in.”

JOSEPH TSANG, MANAGING DIRECTOR AT JONES LANG LASALLE

“But I don’t think the government is doing enough,” said Tsang, adding that the housing prices are going up despite the government’s efforts while the number of people who are on the waiting list for public rental housing is at an all time high.

According to Tsang , there are several factors which are holding back the government’s implementation of its plans.

Due to limited land resources in Hong Kong, finding land for public housing units is a problem while the government also needs to seek a certain balance between public housing and private housing, said Tsang.

Second, the government’s plans of constructing residential properties were often opposed by local communities as well as conservation groups, who have made it much harder, and the discussion period much longer for the government to execute its supply boosting plans, he said.

Besides, many people who currently are living in public rental housing units are no longer qualified, said Tsang.

“They should move out of these units once their income increased to a certain level, so people on the waiting list can move in … unfortunately this is not happening right now as most families after getting into the public rental housing units would just live there forever.”

The government should do something at the legislative level to make sure that it could meet the target of boosting housing supplies, said Tsang, adding that when it comes to people’s qualification of living in public rental housing units, the government also needs to be more “firm” about the rules.

Tsang also suggests the government should forbid people who live in private housing units to apply for apartments under The Home Ownership Scheme.

“The HOS units should only be available for people and families who currently live in public rental housing units. Only then will more people move out of the public rental housing units to allow more people on the waiting list to get in.”

Tsang stresses that increasing supply, especially the supply of public housing units, will benefit families with relatively low household income but do no harm to local developers’ interest. Supply rise expected

“I believe developers have recognized that public housing and private housing belong to two different markets, as public housing units are targeting people and families who cannot afford private housing units,” he explained.

Echoing Tsang’s words, Eddie Hui Chi-man, professor of the building and real estate department at Hong Kong Polytechnic University, also believes that the government’s measures of increasing housing supply is the key to solving Hong Kong’s housing problem.

Hui said that although he understands that people are eager to see some positive results from the government’s efforts, they need to know that a policy change may not take effect as quickly as they thought.

It needs at least four to five years for a plan to produce land sites and finally turning them to residential units, he said, adding that people needed to be a little bit more patient.

“From what I see, the next few years would be better than now, along with more land supply starting to become apartments. Meanwhile, there is strong anticipation that the US government may raise the interest rate at the end of this year or earlier next year,” said Hui, adding that local developers may speed up in their construction paces and get their products to the market as soon as possible.

“We are expecting to see an increase of supply in both private housing units and public housing units as early as next year,” said Hui.

Aside from boosting supply, the ultimate means to suppress the housing prices in Hong Kong is that the government could reconsider its “dollar peg”, said Tsang.

He pointed out that as the Hong Kong dollar is pegged to the US Dollar, the continued depreciation of the currency as well as the extremely low interest rate environment is almost asking people to purchase real-estate.

Although the government says depegging the dollar would be unwise for now, critics say the currency switch is inevitable, and it could the ultimate solution for Hong Kong’s high property prices, said Tsang.