Hong Kong can’t solve its housing problems without trade-offs

Anthony Cheung says the housing shortage is real and serious, and it cannot be eased without some pain

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Anthony Cheung

Published: 5:49pm, 21 Dec 2016Updated: 6:34pm, 21 Dec 2016

We need land in order to build, and it requires the efforts of the whole community to overcome the planning and political hurdles of our ambitious housing projects. Illustration: Craig Stephens

Housing is our No 1 social concern and the government’s top priority. Both housing prices and rents have soared over the years in Hong Kong, making housing increasingly unaffordable for the general population, especially the working poor.

Following wide public consultation, the government announced its Long Term Housing Strategy in December 2014, with a 10-year rolling target of new housing supply based on holistic demand assessment. The latest 10-year supply target, for 2017/18 to 2026/27, remains at 460,000 new units, of which 200,000 are public rental housing and 80,000 subsidised sale flats.

The serious supply-demand imbalance has to be addressed on both sides.

In 2010, the previous government introduced a special stamp duty to discourage short-term speculation. This term, we enhanced this duty, and introduced a buyer’s stamp duty in October 2012 to curb non-local purchases. Meanwhile, the Monetary Authority has implemented several rounds of macro-prudential measures for property mortgage loans. In February 2013, the doubled ad valorem stamp duty was introduced for all property transactions, targeted at those who are not Hong Kong permanent residents, as well as permanent residents who already own a residential property here.

Both the special stamp duty and the buyer’s stamp duty have been effective. By this October, only 1.8 per cent of total residential property transactions involved purchases by non-local individuals and non-local companies, much lower than 4.5 per cent before the introduction of the buyer’s stamp duty (January to October 2012).

Despite the market cool-off, however, housing prices rose by 3 per cent month-on-month in September, then by another 2.6 per cent in October, getting very close to the peak price level in September last year. Alarmed by the risk of another round of market exuberance, we raised the ad valorem stamp duty for residential property transactions last month to a flat 15 per cent, while retaining the existing exemption for permanent residents who do not own any other residential property in Hong Kong.