Hong Kong's then-Secretary for Security John Lee Ka-chiu during a press conference inside the Central Government Offices in Hong Kong on May 17, 2021. Photo: AFP / Vernon Yuen / NurPhoto

Hong Kong has gone through many struggles over the past few years, first the 2019 protests, then the Covid pandemic. Recently as Hong Kong is opening up to the outside world after pursuing a near-lockdown policy, it has finally come to the task of fixing its core issue: the housing problem. 

The Hong Kong Special Administrative Region (SAR) will get a new chief executive on May 8, and the housing issue should be a priority for John Lee Ka-chiu if he wants his tenure to see any success. Lee is the sole candidate allowed by the central government in Beijing to run for chief executive; at least four other people vied for the office but lacked sufficient nominations.

The coming five years is a critical moment for Hong Kong to turn around from chaos to good governance. The housing problem expanded the discontent of Hong Kong people, triggering the 2019 protests. If it remains unresolved, it will continue to be a time bomb for the city, and protests are bound to happen again.

Hence the director of the Chinese State Council’s Hong Kong and Macau Affairs Office, Xia Baolong, made an official declaration in July 2021 that “Hong Kong would be a vibrant city with no shortage of affordable housing by the time the nation celebrated the 100th anniversary of its founding in 2049.” 

Getting rid of subdivided units is a priority political mission according to Xia, not just a superficial housing or social issue. John Lee visited two grassroots families early this week to show his commitment to this mission.  

Global role

Hong Kong is a global financial hub and the world’s third-largest financial center. It is also a financial center for the Greater Bay Area of China and thus plays a strategic role for China’s development in the years to come. All these facts mean that its success is important to China on the global stage.

However, for any success to happen, stability is the key, and to achieve that, people need to have affordable homes. And this has been impossible in Hong Kong in the past. The chief executives in the past four terms could not tackle shortage of affordable housing even though all of them claimed that they were concerned about it. 

Housing policies shifted under different leaderships, which resulted in inconsistency. Tung Chee-hwa’s “85,000 flats” advocacy was terminated because of the Asian financial turmoil in 1998. Donald Tsang scaled down all public housing schemes, which turned the whole housing policy in an opposite direction. 

The third chief executive, Leung Chun-ying (C Y Leung), was a veteran surveyor but his leadership style was seen as too left-wing, and so was attacked by most of the developers and politicians in Hong Kong. The social atmosphere went to extremes after the Occupy Central protests and C Y Leung could not get enough social support to reform housing policies. 

The fourth chief executive, Carrie Lam, was more pragmatic than her predecessors. She set up three plans, namely Lantau Tomorrow, Northern Metropolis and streamlining the process of developing land for housing construction such as technical studies, planning permissions and land reclamation, which created too many hurdles for new housing developments.

Furthermore, she implemented a minimum living area per capita of 280 square feet (26 square meters) into the land sales contracts and tenancy control of subdivided units. 

However, the fifth wave of Covid-19 and the vested interest of pro-establishment camps ruined her plan for re-election. 

Still, Lam has laid a solid foundation for solutions of the shortage of affordable housing in Hong Kong. If we review the number of public housing units built by the past four chief executives as a key performance indicator, Tung Chee-hwa and Carrie Lam had the best performance in the housing aspect.

Prices too high

Hong Kong has been named the world’s most expensive city in which to buy a home. The average price of a 1,000-square-foot (93-square-meter) home adequate for two parents and two children in 2022 is around HK$15 million (US$1.9 million). That means HK$15,000 per square foot. For a small 200-square-foot apartment, which can only fit a double bed with a sofa, the price is around HK$6 million. 

For a low-income earner it is impossible to afford an apartment, and so they usually rent a subdivided unit for an average rental of HK$6,000 per month. The rental expenditure takes up more than half of their income.  

The Hong Kong government under the four previous chief executives could not solve this housing problem because they only focused on the development of the housing mortgage market and neglected their responsibilities to build social housing for poor households. The budget for public housing has been reduced dramatically. 

According to the 2022-23 annual corporate plan and budget approved on January 17, 2022, the cash flow of the Hong Kong Housing Authority, which is an official institution to provide public housing in the SAR, was about HK$57.9 billion in April 2021. That was only about 7% of the total government expenditure of HK$807.3 billion. This percentage is relatively low if we compare it with the expenditure for social welfare and education. 

In fact, Hong Kong’s public spending on housing now is the lowest in nearly 40 years. The waiting time for public housing continues to increase. At the same time, around 200,000 people are living in subdivided units, which have been described by the government itself as inadequate for a decent life. 

To solve the problem, Beijing has to get involved. The change of focus from mortgage policy to provision of housing security needs overwhelming investment of public money, for which the central government’s permission is necessary. 

Liaison Office officials visited occupants of subdivided units on the National Day in 2021 to see for themselves that the housing issue has become an alarming problem. If it remains unsolved, the stability of Hong Kong will be at stake.  

The new administration should formulate laws and policies to ensure that the public expenditure on housing is maintained at a level commensurate with per capita income, so that people’s basic housing needs are not threatened. The government should ensure that housing policies do not contain discriminatory elements and do not increase social inequality. 

Policies and legislation need to aim at reducing the gap between the rich and the poor and providing affordable housing. If the government finds that some policies have weakened people’s right to an adequate standard of living, such as causing real-estate speculation, an increase in homelessness or a crisis in public affordability, it should immediately adjust and revise those policies. 

As Hong Kong people, we hope the new administration can finally solve the housing problem and, for a start, persist with the three housing policies laid out by outgoing Chief Executive Carrie Lam. 

Maxine Yao

Maxine Yao is a chartered surveyor and community organizer for Path of Democracy, a Hong Kong think-tank that pursues maximum democratic development under the “one country two systems” framework. She holds master’s degrees in real estate from the University of Hong Kong and in public administration from Tsinghua University.