Stuck in the Middle
The myth of affordable housing gets more and more complex
| Text : Elizabeth Kerr | Photo : Cato Sze |
At the end of January, right before the New Year kicked off, the Royal Institution of Chartered Surveyors (RICS) released a research report titled Report on Housing Affordability in various Asian Cities and on the Forecast of Housing Needs in Hong Kong in the next 5, 10, and 20 Years. Getting away from the fact that that’s a mouthful, the content of the report is what’s most eye-catching. In essence, RICS concluded that a full 30 percent of all residents in Hong Kong are in the fabled “sandwich class” and may never be able to afford owning private housing. Not without a serious policy course correction.
In a statement, RICS Hong Kong Governing Councilor and Chairman David Tse said, “At present, there appears to be a mismatch between the supply of small sized flats, Class A flats, and the needs of the average households, but in recent years, we noticed that the unit price per square foot of large sized flats, Class C, D and E flats … were rising much faster than those small sized flats with one or two bedrooms. RICS is calling on the government to conduct regular surveys on the future aspirations of the average households on types and sizes of flats before laying down appropriate housing and land supply policies to meet the functional and future needs of Hong Kong households.” The report goes on to say that outrageously priced private housing and an overheated market are going to keep the sandwich class trend strong for at least the next two decades.
That’s a far cry from comments reported in these pages earlier this year alleging the purchasing panic that was gripping the city was largely hype, and that there was indeed affordable private housing in Hong Kong. RICS’ report is meant to be a tool for government in forging its long-term housing policy. The report makes comparisons with other Asian countries in an effort to formulate a plan that may work here. Hong Kong needs approximately 20,000 new flats per year until 2031 to ensure everyone has a home, but the 2010/11 Policy Address falls short of that number by 10 percent. The newly announced My Home Purchase Scheme will provide 1,000 units per year, but its criteria make 35 percent of households eligible based on numbers from the 2006 census. So much for it being a minority issue.
The research, not surprisingly, made a stark connection between home ownership numbers and price-to-income ratio (PIR), with Hong Kong sitting at the very bottom with a PIR of 22.72 and home ownership of 52 percent. Only Tokyo has a lower ownership rate (45 percent), but a PIR of only 11.64. Shanghai comes next, with a 20.68 PIR, but 80 percent ownership. Singapore fared best all around, with a moderate 14.35 PIR and a whopping 89 percent ownership.
“In our recommendation to the government, we have drawn reference from nearby Asian countries or cities including public rental housing that targets middle-income residents in mainland China, rent-to-own option for affordable housing in Singapore and Malaysia and concessionary mortgage provision targeting young people in Taiwan. We wish government could take these as examples and form its own sustainable and long-term housing supply strategy for Hong Kong,” said KK Wong, chairman of RICS Hong Kong. So do we.
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