Even the new Miss Hong Kong had something to say about her city’s housing crisis: “If you don’t even have a place to sleep, how can you talk about dreams and aspirations?” asked Louisa Mak Ming-sze in a recent interview with the South China Morning Post, adding that the region’s soaring property prices had left young people unable to pursue lives of their own choosing.
The statistics on housing affordability in Hong Kong get grimmer with each passing year. According to brokerage firm Centaline, apartment prices in Hong Kong reached an all-time high in August, up 18 percent from last year, partly due to an acute shortage in supply. The average home price is now 17 times the average median income. Waiting lists for public housing also are at an all-time high, with 140,200 general applications—with roughly equal numbers of recent college graduates and elderly—in the pipeline, representing individuals who will have to wait several years to reach the top of the queue.
An acute shortage of new housing, wage stagnation, and deteriorating conditions of the existing housing stock are just some of the factors making housing affordability out of reach for many Hong Kong residents. The situation threatens the city’s future since young people are unable to rent or buy homes of their own, and households have to spend an outsized portion of their monthly earnings on rent.
It is no wonder that ULI Hong Kong has placed the issue of housing front and center on its agenda. Last fall, the council received an Urban Innovation Grant from the ULI Foundation to develop a series of recommendations for tackling Hong Kong’s lack of housing options and affordability, and it intends to publish a final report on the topic early next year. In September, members held a follow-up discussion to share key findings from their research so far.
Broadly speaking, any strategy must take a collaborative approach among the public, private, and nonprofit sectors, participants said. One key but complex issue underlying the housing crisis is wage stagnation: wages in Hong Kong have not kept pace with the increase in home prices, causing major problems for low- and moderate-income households.
For those who do have a roof over their heads, their quality of life is challenged on a daily basis. People are living in cramped conditions or otherwise inadequate housing, which affects their health and well-being. “People should not have to live in inadequate subdivided and illegal and dangerous ‘cage homes’ ” said Sujata Govada, a ULI trustee and one of the workshop’s leaders.
The government’s long-term housing strategy has a ten-year target of 470,000 units, of which 60 percent will be public housing. Of these, 200,000 will be rentals and 82,000 will be homeownership project houses (i.e., subsidized homes that are sold to existing public housing tenants). But panelist Gordon Ongley, senior adviser at Swire Properties, argued that the only solution is for the government to build more housing. “They have to provide public housing for all who can’t afford it and be a safety net, but different strands of society have different housing problems and there isn’t one simple solution.”
As for long-term strategies, Ongley said that the government should think again about lifting height restrictions: “At the moment, it seems like the government’s long-term plan is to reclaim land from the sea and build there, but I would argue that a better solution is to allow the full potential of sites to be developed. The market wants tall buildings—people like living up high at the top—so reducing the number of height restrictions is one way of immediately increasing supply.”
But the panel said that the public sector alone may not be able to meet the growing need for affordable housing, equally for those who qualify for public housing and those who cannot afford market-rate housing but earn too much for public housing.
Comparing Hong Kong’s housing statistics with those of five other cities around the world—Singapore, Tokyo, Seoul, London, and New York—the panel suggested that there could be some policies that Hong Kong could adapt from these cities. In Singapore, for example, personal savings accounts are compulsory, and up to 30 percent can be set aside toward purchasing a home.
In Seoul, public housing projects are built exclusively in urban areas, which are strongly networked by transportation links; the government also offers multiple types of public housing rent options. One idea from London is shared-ownership opportunities for lower-income households. Eligible buyers pay a mortgage on 25 percent of the property price and below-market rent on the remaining 75 percent, which is owned by a government housing association. In New York, tax exemptions for developers to provide affordable units might work in Hong Kong as well.
The panel reached several interim conclusions, one of which is that there is a lack of incentives for private sector involvement, a lack of proactive leadership on housing within the government, and that the planning process is stifling development. The forum concluded that Hong Kong needs the following:
- An actionable affordable housing strategy, which sets out detailed area-based policy on affordable housing mix, type, and tenure.
- Private sector participation in new housing development; Hong Kong can benefit from the expertise, swift management procedures, and housing delivery of the private sector.
- A broader spectrum of affordable housing options, which would better fit the existing broad spectrum of household incomes.
- Streamlined implementation; different government agencies and bureaus would need to cooperate more effectively to increase housing delivery.
- Flexible zoning; housing delivery is subject to a stringent approval process, but a more strategic approach to planning would speed up housing delivery.
- An emphasis on new development areas in the New Territories, which would optimize available land.
- Coordination with Shenzhen on meeting housing and infrastructure needs for the entire Pearl River Delta, which will function as one urban region after 2047, when Hong Kong reverts back to control by China’s government.
James Hacking is senior vice president at Blue Current, a public affairs firm in Hong Kong