Two essential things to solve HK’s housing supply crisis

Most Hong Kong people regard an apartment not just as a place to live, but also as somewhere to call home. However, the present public and private housing shortage means that the wish of having one’s own home is unreachable for many people. How to boost the supply has been the most discussed question when it comes to land and housing in Hong Kong.

Earlier this year, we published an annual review, providing an exclusive 10-year forecast on public and private housing supply. Based on a quantitative tabulation, we concluded that if things continue to proceed at the current speed, the SAR government will have no hope of ever reaching its own housing targets in the next decade.

The key to raising short to medium-term housing supply is to ensure all the New Development Areas currently under development come on stream soon

But the situation may be alleviated if the SAR government achieves two things: expediting the implementation of major land supply initiatives by two years, in particular New Development Areas, and raising the housing delivery sourced from rezoning and land administration procedures by 5 percent.

In the next 10 years, the completion of public housing flats is unlikely to reach the target stipulated in the Long Term Housing Strategy.

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In the 2020 Policy Address, it was stated that the government has identified “all of the 330 hectares of land required for providing 316,000 public housing units to meet the demand for about 301,000 public housing units in the coming 10 years.” It should be noted that the figures referred to may include flats still under construction in the next decade, instead of the actual housing delivery.

Based on our forecast, if all land supply initiatives continue to progress at the current speed, only 277,400 public housing units could be completed in the same period. To achieve the figure stated in the Policy Address, New Development Areas and other major land supply initiatives will need to be completed with an expedited timeline, approximately two years ahead of their current schedules. In addition, the annual supply of flats from rezoning needs to be increased by 5 percent over the current level.

For private housing, we expect only an average of 15,000 units per year to be completed in 2021–2025. Looking further, in the years of 2026-2030, an average of 12,000 private housing units are expected to be completed, which fails to meet the LTHS target.

If the SAR government wishes to fulfill the LTHS target, New Development Areas and railway projects need to be completed one year ahead of the original schedule, and supply from private development needs to deliver 5 percent more units each year.

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The above analysis goes to show that while the housing shortage in Hong Kong has been a daunting one, it is not entirely unsolvable. A cushioned landing is possible in the next 10 years, as long as the government gives up its “business-as-usual” attitude and is genuinely determined in meeting its housing target.

The key to raising short to medium-term housing supply is to ensure all the New Development Areas currently under development come on stream soon. Take Kwu Tung North, Fanling North and Hung Shui Kiu as examples, although these development projects started in the early 1990s, they are expected to be fully completed from 2031-38.

The government is advised to conduct an in-depth study on compressing the development procedures of New Development Areas, and speed up transport infrastructure projects that support New Development Areas, in particular road infrastructure including Route 11, Tuen Mun Bypass, and Lantau Road P1, as well as railway infrastructure including the Northern Link, Tuen Mun South Extension, and Tung Chung Line Extension.

We also urge the government to ensure the newly set up Development Projects Facilitation Office announced in 2020 Policy Address can perform its functions effectively to streamline the administrative and approval processes in private housing development.

On public housing supply, we pointed out in a report published last year that many public housing projects were delayed due to bureaucratic procedures. We call on the government to leverage the Steering Group on Streamlining Development Control, with its expanded function, to improve cross-department coordination and to compress the timeline of public housing developments.

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Looking ahead, the government must have the ability to develop large-scale new towns in a comprehensive manner, as well as the strategic vision to build a land reserve to support the long-term development of Hong Kong.

Ryan Ip is the head of land and housing research at Our Hong Kong Foundation. Iris Poon is a senior researcher at Our Hong Kong Foundation.