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Expert Insights | There’s no instant fix for Hong Kong’s housing crisis

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CK Lau, Managing Director of Colliers, writes about how to expedite housing delivery as a sustainable solution

There is no instant fix to Hong Kong’s housing crisis, but we’re on the right track. 

Last July, Hong Kong and Macau Affairs Office Director Xia Baolong challenged city administrators to resolve its centuries-old housing crisis by 2049, the PRC’s centenary. This July, Hong Kong’s new Chief Executive, John Lee Ka-chui, vowed not to let the 6.1-year wait time for public housing deteriorate. 

Recently I was a panellist at the China Conference: Hong Kong at SCMP, where we discussed pathways to solve the housing problem, coming up with ideas that might hasten a solution.

Lee has set up two task forces, one to tackle land supply, the other to expedite construction to tackle the wait time. He does not want eligible applicants to wait any longer than the current 6.1 years for a home. The previous administration laid strong foundations to streamline land and housing production. But, we still need to cut as much red tape as possible and find better ways to our resources. 

The previous administration pledged 330,000 public housing units by 2032. Yet, it only planned to provide 100,000 in the first five years. Burdening the remaining five with two-thirds of the total will likely cause delays and target shifting. 

Land creation and infrastructure construction are lengthy undertakings, sometimes taking decades. One of the best ways to expedite housing delivery is to shorten the construction timescale to get units into the market faster.  It seems logical that with Hong Kong’s scarcity of land, we should increase plot ratios and build tall. But this is not always ideal, as it adds to construction time and costs. 

One of the best ways to expedite housing delivery is to shorten the construction timescale to get units into the market faster.

Affordable private housing encourages residents to become owners, freeing up their space in public housing. For example, we should reconsider how we design and dispose of the housing, such as allowing a car park to be above ground without counting for plot ratio purposes. Often, a car park can mean excavation, adding more in the way of time and costs, especially on smaller sites. If we only build 30 storeys and move car parks above ground, we can shorten construction time and make more affordable homes available faster.

During the panel discussion, pundits bandied about many quick-fix solutions. For example, using homes destined for the Home Ownership Scheme (HOS) as public rentals or ensuring that tenants in public housing financially qualify to be there. Let us bear in mind that the HOS turns public housing renters into homeowners, a vital step to improving people’s upward mobility.

Over the years, the former administration changed the Long Term Housing Strategy’s public-to-private housing ratio. Eventually, we ended up with 70% public and 30% private; furthermore, some 30% of that public housing would be for sale. This aligns with the government's objective to increase home ownership and encourage renters onto the first rung of the property ladder. If we halt the HOS, we will exclude many people from the property market, putting even more pressure on public housing. 

Furthermore, the government must make the Land Sharing Pilot Scheme more palatable for developers. The LSPS was an excellent way to encourage developers to provide more land for public housing by increasing plot ratio and sharing any newly created GFA. Developers were keen when the scheme was in early discussions, happy to split the newly generated GFA 50/50 with the public. But reducing their share to only 30% has slashed any incentive, reducing profits. Gaining permission to proceed with a development is not easy, even with the input of the Land Sharing Office set up by the government for this purpose. The government needs to bear its original objectives in mind and consider returning to the fairer 50/50 split. 

A quick win would be to increase plot ratios for sites well served by infrastructure, which significantly increases plot ratios.

We ought to push New Development Areas to capacity. A quick win would be to increase plot ratios for sites well served by infrastructure, which significantly increases plot ratios. The government recently spontaneously increased plot ratios through a section 16 application process in the Kwu Tung North and Fanling North New Development Areas, increasing potential private housing by 20% and public housing by 30%. 

This rush for housing solutions concerns me. Before taking any drastic measures, we must consider the consequences on Hong Kong’s markets, which are exceptionally sensitive. A mere whiff of change can make prices volatile. These days, an assortment of issues is causing a lull in the housing market. Even with general prices increasing, property prices do not due to the rate hike. 

However, Hong Kong seems to have gone through the worst of this economic cycle. I am optimistic about the future. We have a very low unemployment rate and lighter quarantine restrictions. People will return, as will companies and the housing market will recover. Hong Kong is still a desirable market. 

The article was published on South China Morning Post on 30 August 2022. 

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CK Lau

Managing Director | Hong Kong & Managing Director | Asia CVAS

Managing Director's Office | Hong Kong

Hong Kong

CK Lau is the Managing Director | Hong Kong and also leads the Valuation & Advisory Services business as Managing Director | Asia.  He has over 30 years’ property experience in valuation, real estate consultancy and investment sales in Hong Kong, mainland China and the Asian region. 

His expertise includes development consultancy; government lease modification application and premium negotiations; investment and development sites sales; litigation valuation advice and expert witness in the High Court/Lands Tribunal/arbitration; portfolio valuations; REIT property advice; rental determination; and valuation due diligence services.

He writes regularly on topics relating to land use and development in Hong Kong since 2010. His collection of over 200 articles in the Hong Kong Economic Journal and other publications can be viewed through the following link:

CK is also a member in the following publications:

• “The HKIS Valuation Standards 2017 & 2020”

• “HKIS Guidance Notes on Valuation of Development Land” published in 2016

• “Surveyors acting as experts in commercial rent determinations” Joint guidance note Hong Kong prepared by the HKIS and RICS Hong Kong” 1st edition 2015


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