Richard Wong

The View | How housing supply in Hong Kong can be increased without building more flats

Richard Wong says the hidden free lunch in Hong Kong’s housing market is the space that could be freed up if public housing renters and subsidised housing owners were allowed to lease out their flats

Reading Time:4 minutes

Why you can trust SCMP

The Housing Society announced in June that around 200 vacant homes in the 56-year-old Yue Kwong Chuen estate would be temporarily rented out to families who have been waiting for public housing. Photo: Felix Wong

Richard Wong

Published: 1:00pm, 28 Aug 2018Updated: 10:34pm, 28 Aug 2018

A tenant assigned to a public rental flat in Hong Kong can pretty much stay there either until he dies, trades up to a subsidised Home Ownership Scheme flat or, on rare occasions, surrenders the flat because he has become well off. The lack of circulation of public rental flats has many negative consequences, particularly in the wake of escalating property prices.

While attention has focused on taking steps to increase the housing supply, there is a more immediate measure that could be taken: lifting the regulatory barrier that prevents tenants in public ownership and rental flats from leasing or sub-leasing their flats.

My proposition may appear counter-intuitive, aiming as it does to address the housing shortage without increasing housing supply. But if we carefully think through the economics of housing allocation in Hong Kong, there is indeed a huge free lunch to be had.

Hong Kong’s public housing sector accommodates almost half the population. Two-thirds of residents in this sector live in public rental flats and one-third in subsidised home ownership flats.

Since the 1990s, the ratio of households to flats available for occupation has been very stable. But this stability is deceptive, given the rising number of subdivided private rental housing units and the growing queue of applicants and long waiting times for public rental flats.