Abacus | Hong Kong’s housing squeeze: the easy fix for next chief executive is ...

When Hong Kong’s incoming chief executive moves into her (or, at the time of writing, just conceivably his) spacious new quarters in Government House on July 1, she will face a cacophony of calls to tackle the city’s housing squeeze.

There can be no doubt that the government’s housing policy needs a radical overhaul. As tenant on Upper Albert Road, the new chief executive will enjoy, among other amenities, a sizable ballroom. Meanwhile, less fortunate citizens are being asked to pay as much as HK$3 million for apartments measuring a minuscule 150 sq ft.

Let’s put that into perspective. Property in London and its surrounding home counties is considered eye-wateringly expensive. Yet the equivalent of HK$3 million can buy you a substantial 1,400-sq-ft house with a garden within commuting distance of London’s financial centre. And your kitchen will be bigger than your entire flat in Hong Kong.

It gets worse. Assuming you can scrape together the down payment needed for a more reasonably sized apartment in Hong Kong, it is likely you will still struggle to pay the rent. Monthly payments on a 70 per cent mortgage for a 540-sq-ft flat currently eat up more than 60 per cent of the median monthly income for families in private housing – that’s with mortgage rates at 2 per cent.

What’s more, if you believe the property professionals, things are only going to get more expensive. The prices paid at recent land auctions imply a further increase in home prices over the next three to four years of at least 20 per cent.

The government argues that to meet burgeoning demand, Hong Kong must build 460,000 new homes in the coming years. The trouble, complain officials, is that the city simply doesn’t have enough building land. Their preferred solution is two-fold: build on Hong Kong’s country parks, and build on new artificial islands reclaimed from the sea.