The View | Turning Hong Kong’s housing challenge into a housing solution

Over the past three decades, opinion polls have shown time and again that housing is the top policy concern of the public. Unfortunately, the housing challenge remains unsolved. I believe this is because we have tried to tackle it as a housing problem and failed to appreciate it is also a problem of economic inequality.

Solving the housing challenge requires directly confronting the consequences of increasing economic inequality in a rising housing market. Increasing housing supply on its own will only worsen economic inequality and harm fiscal budgets and the long-term health of the economy, for several reasons.

First, the share of publicly-supplied housing units has increased from 50 per cent of total supply to 60 per cent. Few neighbourhoods now welcome new public rental housing units in their vicinity because of the adverse impact on property values.

Indigenous villagers and developers, who hold large tracts of land in the New Territories suitable for public rental housing development, are also unwilling to sell because of the government’s unattractive compensation offers.

Second, the development cost of public rental housing units has increased significantly over time. The sale of one Homeownership Scheme (HOS) unit used to support the development of two public rental housing units; now it only supports one.