Housing and social justice in HK
Updated: 2015-12-02 09:33
By Peter Liang(HK Edition)
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Peter Liang cites a new article arguing that greater equality can be achieved through home ownership and says this gives the government's housing policies even greater credibility
In an article published on Our Hong Kong Foundation's website, Richard Wong Yue-chim, professor in political economy at the University of Hong Kong, argued that social justice can be achieved through home ownership. His essay has lent strong academic credence to the government's concentrated efforts to increase the supply of affordable housing.
It seems most appropriate, therefore, for Professor Wong to be the lead author of the first major research project of the foundation, which was founded with great fanfare last year by former chief executive Tung Chee-hwa. While agreeing with the government's general approach in solving Hong Kong's acute housing shortage problem, the foundation's study, which was released recently, made numerous recommendations to address several major issues. These include the potential impact on the market of prospective home buyers, who are concerned about fluctuating prices, and also the costs to the public.
The research notes that there is a significant portion of eligible households which cannot afford to buy government-built homes even at preferential prices. This is a genuine concern especially for those families which prefer to set aside a larger portion of total income on saving for old age or their children's education.
To satisfy the pressing demand for homeownership without requiring eligible households to make an instant commitment, the study proposes the introduction of a "rent-to-buy" arrangement. Under this arrangement, an eligible home buyer is offered the option of renting the apartment for a set period of time before deciding whether he wants to buy it. If he does not, he is allowed to continue being a tenant.
The research expects that the rent-to-buy scheme will help more and more tenants of such units become homeowners in the long-term future. This is because of the proposed built-in mechanism that will allow a tenant to be always able to buy at a preferential price which will not being subject to market adjustments.
In the study, the researchers have proposed several different formulas for price stability. None of them is simple or straightforward. But they are all designed to "provide a stronger incentive for owners to make premium payment, thus facilitating unit circulation and enhancing market efficiency".
The foundation's proposal is worth considering if only because of the flexibility provided to eligible buyers of government-built housing. The added advantage of the scheme is it can help mitigate the impact of the vast supply of subsidized housing on the property market in time for a decline in average home prices.
When this happens in a significant way, eligible homeowners may choose to rent rather than to be locked into a purchase. This is so that they can choose later if they prefer more convenient locations or a better quality of property in the market rather than paying a premium for government-built homes.
Other benefits that the researchers say can be derived from their proposal include "enhancing market efficiency (by) unlocking the full value of public housing units and minimizing public housing resource mismatch" to achieve a more effective use of public resources.
In another section, the survey calls on Hong Kong people to be ready to make "some momentous but difficult decisions" - as they did 26 years ago in launching the "Rose Garden Project", which also included construction of a new international airport. The difficult decisions now, as they then, involve striking a balance between development and environmental protection.
The government's strenuous push to create more land for development has understandably met with public resistance. In this respect, the foundation's study has little to add to what has already been proposed by the government other than recommendations for minor tweaking and a clearer definition of duties between the departments to minimize bureaucratic delays in approving development projects.
In addition, the study calls on the government to reinforce communication with the business sector to increase the transparency of the premium calculation - to better reflect the latest situation and trends of the market.
More important, perhaps, is for the government and opinion leaders to put forward a solution seen by the majority of the public as beneficial to the community as a whole - and not just to those eligible for subsidized housing. In this respect, the foundation's proposal seems to have taken the government housing plan a step forward.
The author is a veteran current affairs commentator.
(HK Edition 12/02/2015 page10)