A Home of One’s Own
| Text : Elizabeth Kerr | Photo : www.thinkstockphotos.com |
Are public subsidies for private homes the way forward for Hong Kong?
On June 1st, the Hong Kong government announced it would begin public consultations (continuing until September) on introducing a subsidy scheme designed to help struggling families and even single professionals actually buy a home in a tough, often volatile market. The idea is to use tax money to do so.
At press time, the process had barely begun but the concept was already drawing criticism. Initial comments came from Housing Authority committee member Fred Li, who called the proposals “biased,” “unclear in their purpose,” and a “stalling tactic” aimed at drawing attention away from the delay in re-launching the suspended Home Ownership Scheme.
The basic argument is that housing prices have become unfeasible for so many in the city and with the supply of entry-level homes so scarce that the situation needs to be addressed. It’s so bad that local filmmaker Pang Ho-cheung recently made a horror film about it. Horror.
To that end, Secretary for Transport and Housing Eva Cheng Yu-wah’s consultation paper (viewable at the department’s website, www.tdb.gov.hk) is hoping to create sustainable policy that would not result in what she referred to as an “anti-cycle” reactive to short-term events in the property market. “No government effort would be able to make a U-turn on certain economic cycles that are based on things like interest rates, which are probably out of our hands,” the China Daily Hong Kong reported her saying.
It’s no secret that Hong Kong suffers a gap between affordable flats in the private market and demand; a quick, layman’s scan of new developments would suggest everything is being marketed as luxury housing selling at premium prices (beginning at approximately HK$20,000 per square foot). Frustration at this disconnect and the suspension of the HOS are what spawned the paper to begin with. That said, any benefits in the old HOS haven’t been itemised, and the questions of who should be eligible for subsidies, how they should be administered and what should be offered in the way of assistance are left up in the air. And that’s what the public is invited to comment on.
According to the paper’s statistics, 48 percent of Hong Kong’s 2.3 million households are already in subsidised public housing or public rentals, and overall home ownerships sits at 53 percent — and 70 percent of that is in private flats. The last of the HOS flats (private units selling at a discount from market value) go on sale in June, and applications are expected to be robust, particularly in light of adjustments to application requirements and quotas. Many on the housing committee still believe the HOS needs to be re-launched after the last round of sales is complete — including Li.
There’s been no mention of it yet, but rumblings from taxpayers always start when it appears public money is going to be earmarked for what some would consider private ventures. It’s similar to the concept, wherever public health care exists, that the taxpayer at large should not have to foot the (potential) medical bill for smokers. “Why do I have to pay for someone else’s poor choices?” The equivalent libertarian attitude that suggests “I had to scrimp and save for my home. You should try that too,” is alive and well. That may be a valid argument, but the facts of the matter suggest the housing “crisis” is here to stay. Is there a tax hike in the future if Cheng’s paper becomes policy? Accountants, property agencies and Legco watchers are unwilling to comment right now, but as time goes by you can bet the comments will start coming fast and furious. Only time will tell if subsidies are the answer to Hong Kong’s property woes. Stay tuned.
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