The View | Demand for welfare housing in Hong Kong keeps rising … and we should beware
Building more public housing gives rise to the paradox of Say’s Law: supply creates its own demand
For many in Hong Kong our housing problem is high prices and high rents due to a shortfall in housing. They conclude that the most adversely affected are the low-income and middle-income households, therefore government must build more housing for these folks, which then means expanding public housing.
But there is another way of viewing our housing problem. High prices are not bad news for homeowners and landlords, it is only for prospective homeowners and renters. Our problem is that 51.5 per cent of our households are now renters. From this perspective, the real housing problem is the unequal distribution of housing wealth.
Given that prices and rents have risen many times against income it would take at least a generation to build enough housing to meet the shortfall in housing. Hong Kong’s divided society cannot wait that long.
Let me explain why building more public rental housing units would not solve our housing shortage any time soon and will continue to divide society.
Between 2006 and 2016, the total number of households in Hong Kong increased by 280,200. The relatively small private rental housing sector absorbed nearly 64 per cent of the increase – a situation that has led to sub-divided housing and escalating rents and property prices. Meanwhile, the applications waiting list for public rental housing units also shot up from 97,300 in 2006 to 284,800 in 2016. Where did these additional low-income households come from?
