Housing in Hong Kong

Housing in Hong Kong varies by location and income. More than 7 million people live on about 1,108 km² (427 mi²) of land in the region, making it one of the densest places in the world.

29.1% of the Hong Kong population lives in public rental housing estates. Kin Ming Estate, completed in 2003, is a public housing estate located in Tseung Kwan O. It consists of 10 housing blocks housing about 22,000 people.
Private housing estates are a common form of private permanent housing. Hong Kong Parkview, located at Wong Nai Chung Gap is among the ones at the top of the market.
Traditional housing can be found in the New Territories. Some villages have been occupied for over 200 years. Here, the entrance gate of Nam Pin Wai, a walled village in Yuen Long Kau Hui.
Urban settlements on Hong Kong Island, Kowloon and some former market towns in the New Territories were mostly developed during the 19th and 20th centuries. Tong-laus, the local form of shophouses, built mostly in the first half of the 20th century, are witnesses of this development.
Caribbean Coast, a 54-storey residential skyscraper, in Tung Chung, Hong Kong.
Pang uk are stilt houses found in Tai O.

Housing statistics

According to the 2016 by-census the breakdown by type of housing was as follows:[1]

Public rental housing: 29.1%
Housing Authority Subsidized sale flats: 15.8%
Private permanent housing: 53.2%
Temporary housing: 0.7%
Non-domestic housing: 1.2%

In 2016 the total Hong Kong population was 7.3 million, and 53% of domestic households were living in private permanent housing and 30.4% were in public rental housing. Another 15.3% of domestic households were living in subsidized home ownership housing.[2]

According to the 2014/2015 Household Expenditure Survey, housing accounted for an average of 36% of average monthly household expenditure, with utilities accounting for an additional 3%.[3]

Public housing
Main article: Public housing in Hong Kong

Public housing is a major component of the housing in Hong Kong. About half of Hong Kong residents now live in public housing estates (Chinese: 公共屋邨) and other tower blocks with some form of subsidy. The history of public housing in Hong Kong can be traced back to the 1950s, where masses of people surged into Hong Kong due to political turmoil on the mainland. This led to a drastic increase in the number of squatters. Fires were common in these unhygienic and cramped makeshift homes.[4][5] In 1953, a fire in Shek Kip Mei destroyed the shanty homes of approximately 53,000 people. In response the Hong Kong Government commenced a programme of mass public housing, providing affordable homes for low income citizens.[6]

Several subsidized home ownership programs have been implemented, including: Home Ownership Scheme, Flat-for-Sale Scheme, Tenants Purchase Scheme, Sandwich Class Housing Scheme and Private Sector Participation Scheme.

High Costs

A CBRE report from 2019 lists Hong Kong as having the highest average property price in the world.[7] There are many contributing factors to Hong Kong's extremely high cost of housing. Though Hong Kong's economy is based on positive non-interventionism, the government intervenes heavily in housing,[8] disrupting free-market economics. The high costs of housing have caused some to live in very small subdivided rooms, sometimes referred to as "coffin homes."[9]

While a number of causes have been pointed out for the 2019–20 Hong Kong protests, state-owned news agencies and newspapers, including Xinhua, People's Daily, and Global Times claimed in September 2019 that unaffordable housing were the "root cause" of the protests in Hong Kong.[10] The New York Times has also reported on the economic roots of the protests.[11] Several reasons for the high costs and lack of free-market economics have been outlined by the media, and are explained below.

Small House Policy

The Small House Policy, introduced in 1972, guarantees male indigenous villagers a grant to build his own house. It has been described as an unsustainable policy due to shortage of land; as noted by a professor at Chinese University, "The problem that has to be faced is that of sustainability. Sooner or later, there will not be enough land to satisfy a potentially endless pool of claimants."[12] Though Carrie Lam has called for an end to the policy,[13] the Heung Yee Kuk, which represents villagers, has spent resources to challenge changes to the policy.[14] According to a SCMP report, 5,000 hectares, representing about 20% of all urban space in Hong Kong, is locked up for these low-rise developments,[14] rather than being used for high-rise developments which would increase the supply of housing.[15]

People's Liberation Army usage

The Hong Kong Garrison of the PLA occupies 2,750 hectares of land across Hong Kong, land that has been reported to be underutilized and could be used for housing instead.[16] In particular, the Castle Peak / Tsing Shan firing range occupies 2,263 hectares, or around 80% of all PLA land area.[17][18]

Brownfield sites

Predominantly in the New Territories, the Legislative Council found that active brownfield sites occupy 1,414 hectares of land, with inactive brownfield sites occupying an additional 165 hectares.[19] A government-appointed task force surveyed the public and found that developing brownfield sites was one of the most favored options for developing new housing.[20] The Liber Research Community estimated that almost 90% of businesses that use brownfield sites could be easily relocated to multi-story buildings, freeing up land for housing.[21]

Rural Land Hoarding

Large developers own large amounts of rural land in Hong Kong, land which could be used for housing. Developers have been estimated to hold at least 1,000 hectares of agricultural land just in the New Territories, equivalent to at least 107 million square feet.[22] In 2019, the government announced that it would seize a total of 7.3 million square feet of land (67.8 hectares), including 1 million square feet (9.3 hectares) of underutilized land from Henderson Land Development.[23] SCMP found that large developers hold vast amounts of rural land in their land banks,[23] with Henderson owning 44.9 million square feet (417 hectares) of rural land at the end of 2019.[24]

Private Recreational Leases

Land is also used by private sports clubs, organizations which only pay a minimal amount of money for the government-subsidized land they occupy under "private recreational leases." 27 private recreational leases are used by 24 private sports clubs occupying a total of 828 acres (335 hectares).[25][26] This includes the Hong Kong Golf Club in Fanling, occupying a 170 hectare site which the Planning Department estimated could be developed into 13,200 homes, enough to house 37,000 people.[27][26] The Hong Kong Golf Club paid a total HK$2,500,000 in 2017 for rent to the government, only 3% of actual market value,[26] meaning the other 97% is subsidized by the government. The Golf Club charges individuals a full membership fee HK$17,000,000[28] which means a single person's full membership fee covers almost 7 years of rent for the entire club. In another example, the Hong Kong Gun Club pays a total HK$1,000 a year to the government despite operating on a 6.5 hectare site and charging individuals a lifetime membership fee of HK$300,000.[29]

Government Revenue

The government collects a significant portion of its revenue from housing, specifically from stamp duty collection and land premium. As stamp duty is based on transaction price, higher transaction prices generate more income for the government, giving the government a conflict of interest when seeking to reduce the price of housing. CNBC has reported on the conflict of interest, saying "If property values drop, the government can’t generate as much revenue, meaning there’s little incentive to seriously curb Hong Kong's cost of housing."[30] As noted in the Routledge Handbook of Contemporary Hong Kong, "The enormous land sales income is made possible because of the existence of a highly lucrative property market, which is itself the result of the government's 'high premiums, low rents' policy."[31]

According to the Legislative Council, in recent years, housing-related revenue has accounted for anywhere between 27.4% - 42.0% of total government revenue.[32]

Government revenue by item (HK$ billion)
2015-2016 2016-2017 2017-2018 2018-2019
Stamp duties 62.7 (13.9%) 61.9 (10.8%) 95.2 (15.4%) 100.0 (16.5%)
Land premium 60.9 (13.5%) 128.0 (22.3%) 164.8 (26.6%) 121.0 (20.0%)
Total 123.6 (27.4%) 189.9 (33.1%) 260.0 (42.0%) 221.0 (36.5%)

Purchases by mainland Chinese

The One-way Permit allows up to 150 mainlanders a day to permanently move to Hong Kong, a policy that increases demand and pricing for housing.[33] In a 2019 research study named "A Tale of Two Cities: The Impact of Cross-Border Migration on Hong Kong's Housing Market," empirical research determined that 3.67% of all purchases were made by those from mainland China. The study notes that "We provide additional evidence that mainland Chinese buyers create an upward price momentum in Hong Kong’s housing market. Although their percentage is only 3.7% of the entire buyer population, the momentum they create can be quite influential and drive up the market."[34]

Side effects of high costs

Due to the high costs of housing, some people in Hong Kong have found both legal and illegal means to minimize costs or increase the size of their property.

Stamp Duty Exemptions

Newman Investment, a subsidiary of the Liaison Office, has been purchasing property without paying stamp duty, even though Newman is a registered private company.[35] It has been found to have been exempted from several hundred million HKD in stamp duty in the past few years,[36] meaning the government has subsidized purchases for Newman, and that even Beijing's Liaison Office does not want to pay the normal costs of stamp duty.

Stamp duty can be evaded or minimized in other ways, including methods used by Secretary of Justice Teresa Cheng and her husband, Otto Poon Lok-to. Even though Cheng already owned other properties, one of her later purchases was entitled to the "first-time buyer" stamp duty as her earlier purchases were registered to companies she owns and not her directly, saving her HK $6.7 million in stamp duty.[37] Her husband, Otto Poon Lok-to, used another method to escape HK $10 million in stamp duty by purchasing a company that owned a flat at 1 Robinson Road, giving him ownership of the flat (via ownership of the company) without paying any stamp duty.[38]

Illegal structures

Approximately 25% of all residential property in Hong Kong has been illegally modified to add extra space or other features.[39] Even several high-profile government officials have been caught with illegal structures in their properties, including Secretary of Justice Teresa Cheng, former Chief Secretary Henry Tang Ying-yen, and former Chief Executives Donald Tsang and CY Leung.[39]

Segmentation

In the high-end market, the Peak is ranked the 3rd most expensive city in the world in 2007 with a square foot per unit pricing of US $2,008 behind London and Monaco.[40]

Hong Kong's home prices also top the list of least affordable markets among major world cities according to American research institution Demographia's latest report in January 2015. The Demographia International Housing Affordability Survey 2015 includes 378 property markets around the globe, generating Median Multiples according to the proportion of average property price to median household income. Results are categorized into 4 levels: Affordable (Below 3 times), Moderately Unaffordable (3.1 to 4 times), Seriously Unaffordable (4.1 to 5 times) and Severely Unaffordable (5.1 times and over). Hong Kong falls into the grading of ‘Severely Unaffordable’, with the highest recorded index of 17.0 since the report commenced 11 years ago. Second on the list was Vancouver with an index of 10.6, still significantly lower than HK.[41]

Due to recurring issues with housing unaffordability, the government commissioned the Task Force on Land Supply[42] in 2017, which in 2019, presented a report to the Legislative Council with suggestions on increasing the supply of housing. The government's response was that Chief Executive ordered that all recommendations by the Task Force be accepted.

Housing estates

Traditional and historical housing

See also

References
  1. Census and Statistics Department - Population by type of housing 2006, 2011, and 2016 (E101)
  2. Census and Statistics Department - Domestic Households by Type of Housing, 2006, 2011, and 2016 (E103)
  3. Census and Statistics Department - Household Expenditure Survey
  4. Rosario, Louise do (30 March 1995). "HONG KONG --- Long Way From a Home: Housing programme can't keep up with demand". Far Eastern Economic Review. Vol. 31. p. 1 – via The Hang Seng University of Hong Kong Library.
  5. "Public Housing Development | Hong Kong Housing Authority and Housing Department". www.housingauthority.gov.hk. Retrieved 2019-03-04.
  6. Choi, Barry (30 June 1975). "Housing means more than a roof" (PDF). South China Morning Post. Retrieved 7 February 2007.
  7. "City Showcase Chart | Global Living 2017". CBRE Residential. 2017-12-20. Retrieved 2020-08-24.
  8. Youngson, A.J. (1982). Hong Kong: Economic Growth and Policy. Oxford University Press. ISBN 978-0195813340.
  9. Haas, Benjamin (2017-08-29). "My week in Lucky House: the horror of Hong Kong's coffin homes". The Guardian. ISSN 0261-3077. Retrieved 2020-09-03.
  10. "Protesters on housing fixes: yes, but we want genuine universal suffrage too". South China Morning Post. 2019-09-25. Retrieved 2020-09-02.
  11. Stevenson, Alexandra; Wu, Jin (2019-07-22). "Tiny Apartments and Punishing Work Hours: The Economic Roots of Hong Kong's Protests". The New York Times. ISSN 0362-4331. Retrieved 2020-09-02.
  12. "Sustainability is a big problem for the small-house policy". South China Morning Post. 2014-07-15. Retrieved 2020-09-02.
  13. "Male villager privileges retained in landmark ruling on small-house policy". South China Morning Post. 2019-04-08. Retrieved 2020-06-27.
  14. "Small-house policy: why not all Hongkongers are born equal". South China Morning Post. 2019-05-01. Retrieved 2020-06-27.
  15. "Now is the best chance to reform the Heung Yee Kuk｜Alex Price". Apple Daily 蘋果日報 (in Chinese). Retrieved 2020-09-15.
  16. Wu, Greg Torode, Venus (2017-12-22). "Hong Kong's underused military land a potential goldmine: but a minefield for government". Reuters. Retrieved 2020-11-27.
  17. Chen, Frank (2018-07-03). "PLA urged to release land to combat HK's housing shortage". Asia Times. Retrieved 2020-11-27.
  18. "PLA land offers range of sites for housing". South China Morning Post. 2018-07-03. Retrieved 2020-11-27.
  19. "Study on Existing Profile and Operations of Brownfield Sites in the New Territories" (PDF).
  20. "Brownfield site use and reclamation 'most popular' land supply options". South China Morning Post. 2018-09-02. Retrieved 2020-12-08.
  21. "Government 'exaggerated constraints' in freeing up brownfield sites". South China Morning Post. 2018-12-20. Retrieved 2020-12-08.
  22. "Hong Kong developers cool to converting private reserves into land for housing". South China Morning Post. 2020-09-21. Retrieved 2020-11-27.
  23. "Henderson to yield to Hong Kong's land seizure for public housing". South China Morning Post. 2019-09-26. Retrieved 2020-08-24.
  24. "Henderson Land Development - Land Bank". www.hld.com. Retrieved 2020-11-28.
  25. "Elite sports clubs likely to keep cheap rental deals – for now". South China Morning Post. 2019-02-20. Retrieved 2020-08-24.
  26. "Could a Colonial-Era Golf Club Solve Hong Kong's Housing Woes?". www.nytimes.com. Retrieved 2020-08-24.
  27. "Why wealthy private clubs will have to stump up for land leases". South China Morning Post. 2018-03-29. Retrieved 2020-08-24.
  28. "How do you join 5 Hong Kong private clubs from city's colonial past?". South China Morning Post. 2018-10-30. Retrieved 2020-08-24.
  29. "Green group wants gun club to stop littering Shing Mun Reservoir catchment area". South China Morning Post. 2020-08-24. Retrieved 2020-08-24.
  30. Saiidi, Uptin (2017-04-10). "Here's why Hong Kong housing is so expensive". CNBC. Retrieved 2020-09-03.
  31. Routledge Handbook of Contemporary Hong Kong. Routledge. 2019. p. 343. ISBN 978-1-138-95993-4.
  32. "LegCo Research Office, May 2018" (PDF).
  33. "HK should relook immigration policy to tackle housing issue: JLL EJINSIGHT - ejinsight.com". EJINSIGHT. Retrieved 2020-09-03.
  34. Fan, Yi sheng; Hu, Maggie Rong; Wan, Wayne Xinwei (2019). "A Tale of Two Cities: The Impact of Cross-Border Migration on Hong Kong's Housing Market". doi:10.2139/ssrn.3477421. Cite journal requires |journal= (help)
  35. "Beijing liaison office 'has HK$3.4 billion property empire' in Hong Kong". South China Morning Post. 2020-04-20. Retrieved 2020-08-24.
  36. "Non-liability for payment, remission and refund of stamp duty". kenneth leung. Retrieved 2020-08-24.
  37. Cheng, Kris (2018-01-23). "New Justice Sec. Teresa Cheng saved HK$6.7m in stamp duty buying additional flat as first-time homeowner". Hong Kong Free Press HKFP. Retrieved 2020-08-24.
  38. "Justice chief under fire for not declaring husband's luxury properties". South China Morning Post. 2019-05-30. Retrieved 2020-08-24.
  39. "1 in 4 properties has illegal additions - and owners are getting away with it". South China Morning Post. 2018-01-22. Retrieved 2020-11-27.
  40. ABC News. "ABC News Go." "Hong Kong's Real Estate is World's Peak." Retrieved on 2007-04-06.
  41. http://www.okay.com/en/property-news/Hong-Kongs-residential-property-prices-graded-as-Worlds-Most-Severely-Unaffordable-/276?nid=38
  42. "Task Force on Land Supply". www.landforhongkong.hk. Retrieved 2020-02-13.
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