Hong Kong land and housing supply must flow even in an economic downturn
- Rather than be deterred by sluggish market sentiment, the government should adapt its approach to land creation and housing construction – by sequencing its development priorities, offering smaller land parcels, or turning more land over to building subsidised housing
Learning from this experience, Hong Kong must press on with land creation and housing construction, but with a systematic approach that makes the most of our limited resources.
In terms of land supply, priority should be given to implementing planned land development projects such as the Kwu Tung North new development area, where an estimated six years is needed to produce spade-ready land. With the Kwu Tung MTR station scheduled for completion in 2027, any further delays in land resumption would mean falling further behind this milestone and creating a gap in the supply of spade-ready land.
Authorities must ensure halt to land sales is temporary
Nevertheless, there are also technical considerations involved. Such subdivisions could have an adverse impact on building views, accessibility and land-use efficiency.
Moreover, in the current environment where “cash is king”, the government remains caught in a passive position. Even if these plots are successfully subdivided and tendered, they would not generate as much revenue as in the past.
To avoid unsuccessful tenders causing a housing supply chasm, the government should also consider allocating the sites for subsidised housing.
This approach would offer a number of benefits. First, it would ensure a stable housing supply without directly affecting the private property market.
Second, it would foster a more diverse affordable housing market that facilitates home ownership, improving social mobility in society. In particular, it would give public housing tenants more opportunities to own their home.
Third, it would provide replacement units for tenants affected by urban redevelopment.
Fiscal deficits are common during economic slowdowns, but this does not mean we have to hit the panic button. As long as Hong Kong takes a systematic approach to make full use of its limited resources, we can maximise efficiency and give ourselves a good base for future growth.
Ryan Ip is vice-president and co-head of research at Our Hong Kong Foundation
Jason Leung is head of land and housing research at Our Hong Kong Foundation
Andy Wong is a senior manager, advocacy, at Our Hong Kong Foundation