Massive activity in the Hong Kong property market has left prices unaffordable for many of its residents. The government is not providing enough land for the housing needs of its citizens. See the following article from Property Wire for more on this.
The overheating of the Hong Kong property market has left the private housing market severely unaffordable and the trend is expected to continue for the next 20 years, according to research carried out by the Royal Institution of Chartered Surveyors.
Its new report on property affordability over the next five, ten and 20 years, is being submitted to the government to help finalise annual budgets.
Based on the housing needs of Hong Kong’s demographics, the government should be providing enough land for about 22,000 per year for the next five to ten 10 years, the report points out.
Yet current policy only allows for 18 500 units per year. The RICS report says that more land will need to be released for construction if the shortfall is to be made up.
‘At present, there appears to be a mismatch between the supply of small sized flats, Class A flats, and the needs of the average households, but in recent years, we noticed that the unit price per square feet price of large sized flats, Class C, D and E flats, of three or four bedrooms were rising much faster than those small sized flats with one or two bedrooms,’ said David Tse, RICS International Governing Councillor and Chairman of RICS Hong Kong Housing Task Force.
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‘RICS is calling on the government to conduct regular surveys on the future aspirations of the average households on types and sizes of flats before laying down appropriate housing and land supply policies to meet the functional and future needs of Hong Kong households,’ he added.
The recently announced My Home Purchase Scheme aims to provide 1,000 housing units a year for the sandwich class populace of Hong Kong. Given the income and asset ceiling requirements of the My Home Purchase Scheme applicants, 35% of total households in Hong Kong are eligible for the Scheme, according to the 2006 Census results.
So there will be a severe undersupply of these housing units, unless amendments are to be made regarding the income ceiling and/or the amount of housing units proffered, this scheme is not going to address the housing demand of all middle income people of Hong Kong,’ said KK Wong, Chairman of RICS Hong Kong.
‘In our recommendation to the government, we have drawn reference from nearby Asian countries or cities including public rental housing that targets middle-income residents in mainland China, rent-to-own option for affordable housing in Singapore and Malaysia and concessionary mortgage provision targeting young people in Taiwan,’ explained professor Eddie Hui, of the department of building and real estate at the Hong Kong Polytechnic University.
‘We wish government could take these as examples and form its own sustainable and long-term housing supply strategy for Hong Kong,’ he added.
‘Based on the survey results, we found that housing in general has becoming less and less affordable as property prices continue to escalate. This situation has become worse since the ceasing of Hone Ownership Scheme construction and supply in 2003,’ he explained.
‘For those who are not eligible for public rental housing, or do not seek government housing assistance, purchasing a property has a big impact on their living quality. It could only be worse for them if interest rates rise in the future, or they are forced to purchase even more costly flats due to the lack of supply of lower-cost private properties on the market.’
This article was republished with permission by Property Wire.