Chief Executive Carrie Lam’s 2019 Policy Address doesn’t cut at the core of Hong Kong’s housing woes, proving the government fails to understand the property market.
Photo Credit: Martin Sinclair. Protesters overcome Bank of China’s attempt to set up anti-graffiti barriers on their building at the 14 October rally.
“HK$12k for 120 sq ft and you think that’s OK?” reads a graffiti message scrawled on a wall in Central (pictured below). It suggests a key cause lying behind the unending and increasingly violent anti-government protests: Hong Kong’s acute housing shortage and astronomic property prices.
State media including the official Xinhua News Agency, the People’s Daily, and the Global Times agree with this graffitiing protester They have all simultaneously singled out unaffordable housing as the root cause of the protests in Hong Kong, urging the HKSAR government to boost housing by seizing land “hoarded” by developers with ‘vested interests’.
Although Chief Executive Mrs Lam announced that she and her team must take “bolder decisions and overcome all difficulties with determination and resolve to restore public confidence” (Policy Address 2019 Para 18) on housing and land supply issues, the 2019 Policy Address replays a well-worn tune, and nothing truly bold has been announced to tackle this thorny problem. I would award her a flat fail rather than the 97% success rate in delivering her policies in her two first terms of office that Lam modestly awarded herself in her (contingency) video Address.
Who has the land?
To be truly bold, and with an eye on the current troubles, surely Mrs Lam should have already considered asking China to release a large quantum of military land in Hong Kong that is not being used. Chinese laws covering the garrison state that any unused land, after central government approval, should be handed back “without compensation” to local authorities. The Hong Kong government should now take a fresh look at the underused military land as one of the larger scale solutions to solve today’s housing woes. Hong Kong is part of China and China has always been happy to help when we have faced difficulties, such as SARS. Such a magnanimous Mainland, parent-child, land gift gesture would be helpful to Lam in her current troubles and restore some recent soft power lost by Beijing – a true PR win-win.
The market is NOT in charge
The current government has repeatedly demonstrated that it does not truly understand the Hong Kong property market, as it claims that the land price is determined by the market. Wrong. Let us not forget the government has total control on land supply as only the government can decide when and which piece of land should be sold and for how much. The doctrine of securing the highest land price has always been the guiding principle to secure the government’s general revenue. Sale price may be determined entirely by market demand and reflected in what property developers are prepared to pay under prevailing market conditions, but developers have no control over the land supply. Recently, when developers bid below the government’s reserve price, the government simply withdrew the sale. It is the government – not the market – that sets prices. However, no baker should be blamed for selling high-priced bread when the price of flour, which he can only buy from government, is always high.
Some people, including state media, blame the four major private developers in Hong Kong because they hold at least 1,000 hectares of farmland in the New Territories for speculation. They suggested that the government should invoke the Lands Resumption Ordinance to take back that private land for affordable and accessible housing. However, this simplification wildly misrepresents the case, as developers generally want to convert their farmland to residential use after paying land premium for the use change; they can only earn a profit after the completion of their projects. Furthermore, one of the biggest hurdles regarding the changes of farm to residential land is the government bureaucracy its endless Town Planning Board (TPB) submissions, resubmissions, and rejections of use change requests. Sadly the slow and “in series” TPB procedures on rezoning fail to allow developers to turn their flour into a loaf.
So be bold Mrs Lam, and take steps to simplify procedures. If not, not only the developers, but the government itself will encounter the same delays in resuming huge tracts of both abused brownfield sites and the Policy Address’ Land Sharing Pilot Scheme to increase land supply.
Providing Hongkongers with up to 80% public housing, which is what Singapore currently supplies, must be a top priority of a government who currently only publicly houses around 45% of our population. Fortunately Hong Kong can easily afford this rainy day cost when it is truly a tropical downpour.
Penultimately, the proposed “Lantau Tomorrow Vision” might sound strategic to some, but distant water cannot help extinguish a nearby fire, because this option would would take many dozens of years to actualise.
In short, Mrs Lam must now grasp the housing nettle which she has patently failed to do in her 2019 Address. Only such bold actions could restore public faith, and the time for Lam is now or never.
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