The View | Let’s build smaller public housing, not bigger – and hurry up and kick-start privatisation
Homes offered through Hong Kong’s welfare housing programme are getting bigger, while units offered through private development are shrinking. We need to reel back these distortions
In recent months, if not years, there has been an unending stream of shrill press reports about housing prices scaling new heights, and the size of new private housing units shrinking to new lows. The small size of the units is an interesting question for economics.
The trivial answer is that Hong Kong simply has a huge housing shortage that is expected to remain for some time, due to local and regional economic growth, favourable global macroeconomic conditions (like low interest rates), and a restrictive supply of housing and land.
But causal factors can also be found in the structure and history of our housing market and policies.
Starting in the 1950s, more than 1 million public sector tenants were admitted into resettlement units without means tests, as the British Hong Kong government sought to redevelop Crown land illegally occupied by squatters.
The resettlement units were very small, often around 200 square feet per unit for an entire household, and set the benchmark for future housing development in Hong Kong.
Over time, as the economy prospered, some public housing tenants wanted to improve their living conditions and bought homes in the private housing sector. Private sector developers only had to build somewhat larger units to make their units sufficiently attractive to these buyers.
