By Dr. Kevin Lau
In the realm of housing issues around the world, Hong Kong is among the top contenders, and of course, this is not something to be proud of. Aside from having nearly 130,000 millionaires, many people in Hong Kong live below the poverty line and struggle with housing. As of the end of June this year, the average waiting time for public housing applicants who were successfully allocated a unit within the past year was 5.3 years. It seems unlikely that this waiting time will significantly decrease in the short term, forcing hundreds of thousands of vulnerable residents to live in extremely poor conditions, such as subdivided flats or cage homes. This has led many to believe that Hong Kong's housing problem has reached a critical level.
Hong Kong has limited land and a dense population, which poses significant constraints on addressing the housing problem at its root. This is widely recognized. However, I believe that certain aspects of the current housing policies need to be reevaluated in order to more thoroughly resolve the housing issue. Firstly, the severe disconnect between public housing rents and market rents is an issue that is rarely pointed out but deserves attention. Providing affordable public housing is seen as a "good policy" so few are willing to touch on this topic. However, the consequence of having a substantial gap between public housing rents and market rents is that it fundamentally hampers the government's advocated homeownership ladder. Due to the large disparity in rents, existing public housing tenants have no incentive to move out, rendering the so-called homeownership ladder practically inoperable. A friend of mine who recently started a job even requested not to receive a salary increase after the probation period just to avoid exceeding the income limit for public housing. This illustrates how low the desire to move out is among current tenants.
Furthermore, anyone who has studied economics and understands supply and demand knows that prices are largely determined by supply and demand dynamics. Those queuing for public housing have low incomes and can only afford housing at the lower end of the rental market. Because existing public housing tenants are unwilling to relocate and the waiting time for public housing is too long, there is fierce competition among a large group of low-income individuals for a limited supply of low-end rental properties. As a result, the enormous demand has driven up the prices in the lower-end rental market, leading to the crisis we currently observe. The skyrocketing prices in the lower-end rental market also discourage existing public housing tenants from moving out, creating a vicious cycle. So, while maintaining low rents for public housing may be seen as a "good policy" it actually causes hardship for low-income individuals in society who are unable to enjoy public housing. Has the government overlooked this problem?
The second aspect that needs to be reviewed is the homeownership ladder. The Green Form Subsidized Home Ownership Scheme, known as "Green Form" offers units that are identical to public housing in terms of design and materials, making them highly interchangeable with public housing and serving as an opportunity to activate the homeownership ladder. Unfortunately, a significant portion of Green Form units, more than half, have a usable area of less than 30 square meters, with some units even smaller than 20 square meters. With such limited space, it is challenging to attract public housing tenants to purchase these units and vacate public housing units for those on the waiting list. Even the government acknowledges that in the "Green Form 2022" scheme, which began the selection process at the end of March this year, approximately 100 units, all with a usable area of less than 20 square meters, remain unsold. This indicates that the Housing Authority needs to review the design of the Green Form scheme and increase the number of units with larger usable areas in order to attract public housing tenants to move out and activate the flow of the homeownership ladder.
The author is a specialist in radiology, with a master degree of Public Health from the University of Hong Kong, and an adviser of Our Hong Kong Foundation.
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