25 October 2018

• Evaluate the policy changes whether they are appropriate for the social and economic needs
• What are the political environment and constraints in the execution of these policies and their
effectiveness.
•
• Don’t put too much background but be selective about issues and what are the course and
background
• Explain and evaluate
• Use evidence to backup argument
• Critical thinking - making connection between ideas
• Everything is related to everything
• Free to question assumption
• Major factors – world or regional recession, general economy, foreign investment, events in
China, political uncertainty
• 60400/228400 under age 30 were on the waiting list for public housing
•
Discuss the changes in housing policy in Hong Kong from 2009-2018 in the social, political
and economic contexts, and elaborate on the three most important factors.

Housing policy 2008-2018

Introduction

Hong Kong often being promoted as a place of laiseez faire economy, that markets are free to
operate with minimum government intervention. (Ref) The effectiveness of the government to
use planning to provide housing remains a constant debate (Chiu 2007)

Nonetheless, during different economic conditions, the government of Hong Kong instigate
policies in response to different economic and social conditions. In the private sector,
maintaining a healthy real estate market with a view to encapsulate over market speculation and
at the same time facilitating wealth creation for individual is essential for a competitive
economy. The real estate market in Hong Kong is a very volatile market without sufficient
protection homeowners can expose their assets to market bubble, despite the long upward trend
since mid-2003 (ref). Properties prices faced two major adjustments in 2008 Global Financial
Crisis and 2015 during the China A-Shares sell off. The Hong Kong – US dollar peg put risks on
the residential properties and very much affected by the interest rate cycles.

Hong Kong people like other Asian culture would like to have private ownership of homes a
sense of belonging (ref). With the scarce resources of land surrounded by mountains and waters,
almost 75% of the areas are country parks and protected areas and only 25% are developed site.
With the continuous growth of population since the 50’s, adequate supply of housing has been an
ongoing issue for the governments of Hong Kong in the colonial days and the current SAR
Government. The first public housing construction project began soon after 1954 Shek Kip Mei
Fire which caused many people homeless. (Hong Kong Housing Authority 2012). From then on
various forms of home ownership schemes was proposed and implemented by the government to
improve the living conditions. The two common schemes under the government policies are
Public Rental Housing (PRH) and Home Ownership Scheme (HOS).

Brief Background on Hong Kong’s Housing Structure and the Contributing Factors

Lands in Hong Kong are owned by the government on a lease to developers 1 it has the control on
the land supply side from short, medium to long term. Because of this, the simplest way for
government to building public housing is to find new land instead of acquiring sites that are
already leased. But this process has a lead time from site search and allocation, infrastructure
development to actual construction. Usually take a few years and even longer for large scale
planning.

Nevertheless, government of Hong Kong has throughout the years developed a number of
schemes, these includes Green Form Home Ownership Scheme, land sale, converting buildings
suitable for residential use with premium discount, and in the longer term, brown field site
development and reclamation, including the successful large-scale new town developments in the
past. Hong Kong’s domestic households can be divided in mainly predominantly these main
categories according to Hong Kong Housing Authority – public permanent housing including
rental flats and subsidized sale flats, private permanent housing 2. In proposing and implementing
these housing policies the government in administration has to consider in the context of social,
political and economic factors

In terms of social aspects, affordability is a controversial subject in Hong Kong since 2011 when
the prices of private residential properties exceeded the 1997 level (Centa-City Index) the current
price-to-income is 18.1 (when globally 3.0 is considered affordable and 5.1 is already considered
severely unaffordable.3) . Grievance in the society began to develop as the price to income ratio
has become out of control (ref). People in the low income group are forced to live in
unauthorized building structures, sub-divided units, “coffin homes”, and other sub-standard
housing. Social polarization also increases between the homeowners and non-homeowners.

1
With the exception of St John’s Cathedral which is freehold. (Hong Kong Lands Department 2005)
2
Also include a small percentage of temporary housing of less than 1% representing places not intended for
residential uses. (Housing in Figures, Hong Kong Housing Authority 2017)
3
The U.S. Department of Housing and Urban Development's (HUD's) Office of Policy Development and Research
(PD&R) Available at: https://www.huduser.gov/portal/pdredge/pdr-edge-trending-081417.html (accessed 24
October 2018)
CCL index for the last ten years (private residential )

In the political context, housing policy campaigns are often used to gain political support, almost
each term of the government administration has a mandate to restore a proper housing ladder
according to real estate market conditions. During the difficult times such as global and regional
economy crises in 2008 and 2015, political unrest began by the Occupy Central movement in
2014, Government tend to address the fundamental issues such as housing which concerning the
citizens of Hong Kong to maintain political stability.

Economically, What happened in the past when the policy was not timely executed – a genuine
solution could become a problem in the eyes of the people which can be a political and social
issue. This was evident under the Tung’s Administration who launched the annual 85,000 target
briefly and was sliently brought to a halt when the Asian Financial Crisis hit. (ref) Part of this
sentiment has very negative impact to his administration (REF).

***

Scope
This paper will first provide a background of the housing structure. Why the three issues – social,
economic and political factors are important factors for the government to consider when
preparing their policies year after year. Then it will discuss and evaluate the changes in housing
policy in Hong Kong from 2009-2018, which was covered by three terms of the Hong Kong
Chief Executive administration.

The scope of this paper cover the housing and land policies in the past decade between 2009-
2018, encompasses three terms of government administrations by Donald Tsang (2005-2012),
C.Y. Leung (2012-2017) and Carrie Lam (2017- present). This paper will focus selected issues
on the changes and effectiveness of these policies in their social, economic and political context.

Priority shift between 2009 to 2012 – reduce waiting time for PRH,

First, how Donald Tsang’s administration focus on:

 Resume Land Application List
 Increase land supply
 Pledge to reduce waiting time for PRH under three years (number of under 30 groups
increased to 60400 (Of 228,400 applicants on the waiting list at the end of March last
year, 60,400 were aged below 30. The number had grown from 16,500 in 2009 to 45,700
in 2012. https://www.scmp.com/news/hong-kong/article/1395251/more-young-people-
drawn-public-rental-housing

Second, how C.Y. Leung’s administration proposed

Third, what Carrie Lam’s administration proposed focus on homeownership instead of new land
supply

In the conclusion,

Critic and evaluate

***

Political mandate to gain popularity

Tsang’s administration afraid to reintroduce HOS overshadow buy Tung’s 85,000
CYL reintroduce the HOS to reduce the young generation’s grievances after OC
Carrie Lam
“Planning, Land and Affordable Housing in HK”
All pieces of land in HK government owned by Govt there is no need to buy back land in hk to
build public housing

Economic factors

Economic events in the last ten years caused many turbulences in the housing market. In 2008 it
was affected by the Global Financial Crisis, followed by a big market sell-off due to a bubble in
the Chinese stock market in June 2015, which caused the private residential home market to
retreat about 20-25% in both period (Centadata).

Apart from the genuine demands, there were many market speculators from Hong Kong,
foreigners particularly from the Mainland, which caused the Government to intervene with
various new stamp duties since 2012.

At times the Government also intervene the private residential market through the at various
periods for the private sectors. In 2014, the Government then realised they need a long term plan
in housing supply and hence began to formulate the Long Term Housing Strategy (LTHS),
which sets a long term target of 480,000 units to be built with a split of 60/40 split between
public and private residentials.

Social Factors
Coffin homes, Subdivided flats, people resides in industrial buildings, nano flats
Carrie Lam’s policy shifted to reinforce sense of belonging by helping people, especially the
youth to purchase home in HK (whilst still trying to reduce the waiting time, but no measure to
restore

References:

“Home ownership a challenge to both government and citizens”

http://www.chinadaily.com.cn/hkedition/2017-11/02/content_34008233.htm

The new CE also places great emphasis on housing policy but her focus seems to have shifted from
increasing land supply to helping people purchase their own home.
Given that the government's land supply is limited and it does not want to affect land supply for other
uses, the quickest way is to work with private developers and make good use of their land reserves.
Those land reserves held by private developers mostly comprise farm land or brownfield sites in the
New Territories. Unfortunately, in today's highly politicized society, the accusation of collusion
between government and businesses seems unavoidable. No matter how stringently regulated and
transparent the process is, there are bound to be some skeptics who think private developers are
taking advantage of the public and the opposition will certainly try to derail the scheme. Yet, if the
terms offered by the government are too harsh, private developers may lose interest and the
scheme would fail before it begins. The government is well aware of this dilemma so it is still working
on details and only a pilot scheme involving government land has been announced.

Obviously, I do not have a crystal ball that can predict the future situation of the property market.
However, while reading the Policy Address, I cannot help but recall that 20 years ago when property
prices were also at a high level, the government launched schemes to help people purchase their
first homes, drastically raised housing supply targets and planned to have 70 percent of local
residents living in their own home. History does not always repeat itself, but we should all be
cautious. No matter what, it is certain that it takes years to significantly increase land supply and
there will not be a drastic change in supply in the coming year or two. People who are looking to
purchase their first homes may have to wait a little longer.

Various government policies

Census Department
SCMP critics
Affordability comepares to world
2014 - how occupy central change youth’s though on self-home ownership
(studio flats, nano flats)
2010 - Hong Kong 2030 Planning Vision and Strategy (PlanD an DevB)
In 2010 policy address – “Steering Committee on Housing Land Supply”
2014 Long Term Housing Strategy study
Land Supply Task force (report due 2018)
ourHKfoundation established sept 2014
sub-divided flats (HKU’s paper)
Green Form subsided Home Ownership Scheme (GSH) pilot project
social housing
R Chiu’s paper on transferability

 Chiu, R.K. (2007) Planning, Land and Affordable Housing in HK, Housing Studies, vol.
22 no. 1, pp.63-81.

 Housing Authority (2006), Public Housing Development (Hong Kong: Housing

Authority). Available at: https://www.housingauthority.gov.hk/en/about-us/public-
housing-heritage/public-housing-development/index.html (accessed 24 October 2018)

 Census Department
What could have done better?
2008
Social economic conditions
2008 global financial crisis - private residential home prices slumped and then gradually
recovered in late summer 2009. Many homeowners faced with negative equity.

Social polarization intensified.

Time to change overall housing and land supply policies (SCMP)

Policy address 08-09 in the years following reunification, the negative equity faced by many
home owners during the Asian financial turmoil has left a mark on the community. Through a
re-positioned housing policy and market-driven land supply over the past six years, we have
rebuilt people's confidence in the property market, solved the over-supply problem and allowed
the property market to resume development and vitality. We cherish these hard-earned results
and will continue to implement the Application List system to allow the market to decide the
new land supply. Despite the financial crisis we now face, the Government and government-
owned statutory bodies will not indiscriminately supply residential or commercial land. Neither
will we sell land way below market prices.

Fairness and equity / Protection for flat buyers – 56) standardise the definition of “saleable
area” for uncompleted first-hand residential properties. “Saleable area” includes only the area
of the unit, balcony and utility platform. Other areas such as bay windows will be listed
separately, item by item. 57) … for Consent Scheme, standardised definition of “saleable area”,
and developers will adopt the new pricing template for these units

Policy address 09-10

5) When necessary, we will fine-tune the land supply arrangements and discuss with the Urban
Renewal Authority and MTR Corporation Limited with a view to quickening the pace of
bringing readily available residential sites to the market. (piece meal intervention, figures?)

Policy objectives 1) to reduce supply (cooling measures) in the market by continuing the land
application system. government intervention to resume land sales by an application system
(Application list) and not to sell land below market price.

luxurious flats was in strong demand whilst secondary market recovered slowly.

Overall, the market was taking the lead.

2010-2011 (DT)
economy - under recovery from the financial crisis, social polarisation intensity
social conditions - pressure to government to improve home affordability either by regulation or
subsidy

policy - government was trying to prevent market from overheating. in a way to sustain political
and social stability.

Donald Tsang’s intervention includes cooling measures such as resuming land auction and
subsided HOS scheme (MHPP) were re-introduced.
as a result, the housing conditions, the overall market recovery in price hike. The overall housing
affordability becomes questionable. (CCL reached 100, same as the 1997 before the market
crashed)
MHPP (My Home Purchase Plan) -

2012-2018

Mainly by the CY Leung as CE until Carrie Lam took office in 2017.

Social- Hong Kong’s economic growth continue, so as social polarisation.

Young people aspire to have their own homes ( in 2017 SCMP on average took 18 years of all
their salaries to buy a 500 sq ft home)
home prices were excessively beyond affordable, double ageing, housing supply begins to
increase

The implication were to tackle housing affordability problem or to promote home ownership
Youth housing subsidy was erased but not encouraged
emphasis was on supply of land to meet short, mid and long terms

CYL’s main policy - increase supply and suppress demand. to allow the low income to move
into the PRH. to encourage the middle income who can afford to buy their own homes.

intervention - increase new land supply and development intensity, exhaust unused land.
enchance secondary HOS supply - white form eligible for discount
reintroduced HOS. change MHPP (my home purchase plan) to sandwich class housing.

Carrie Lam policy - to raise HOS rate and resconsittue a housing ladder, also to supply PRH to
the wait-listed applicants and residents of the sub-divided units in a way to improve overall
liability

Government intervention - restrict non-HK residents, increase tax to external buyers (BSD) and
investors (SSD/DSD)
2014 LTHS (Long term housing strategy) supply -led and demographic based strategy

Carrie Lam’s new measures include: to build consensus? enhance land supply, start-up homes for
the middle income as well as social housing

2014 Policy address took the lead in adopting the LTHS starring committee recommendation that
pubilc/private housing should have a proportion of 60% fo the ten-year housing supply target of
470,000 units, that is 280,000 Among public housing, 200,000 units should be of PRH whilst the
remaining 80,000 should be of subsidies sale flats

why not reclamation pay by developers at a suitable rate to simultaneously release their farm
land in the territories, in form of land exchange for reclamation.
New social housing in Hong Kong will be modern, airy and all colours of the rainbow, Anthony
Wong tells Sham Shui Po District Council | South China Morning Post