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Hong Kong housing
OpinionComment
Ryan Ip
Jason Leung Yeuk-ho
Ryan IpandJason Leung Yeuk-ho

Opinion | Solve Hong Kong’s housing predicament with a separate market for permanent residents

  • On top of regulating the private market, the government could help make the subsidised flat market more liquid while ring-fencing it for local residential use
  • It should offer more subsidised flats for sale and also start building bigger homes

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Tourists pose for photos at Choi Hung Estate, whose colourful facade has made it a selfie hotspot, on May 10, 2019. Hong Kong’s per capita living space is only 172 sq ft. Photo: Edmond So
Ryan IpandJason Leung Yeuk-ho
Housing remained the top priority in Chief Executive John Lee Ka-chiu’s second policy address, delivered last month; he elaborated on his housing policies at great length. Besides building on the initiatives introduced last year, there were also new measures responding to the latest market developments.
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While it was encouraging to see signs of the housing supply shortfall reversing, this is merely the first step in solving the long-standing issues of limited living space and unaffordable housing. It is important to know where we are and determine our next steps in the pursuit of improving liveability in Hong Kong.

As expected by the market, the policy address announced a partial easing of “spicy” property curbs. The special stamp duty levied on resold property now applies to resales within two years, rather than three, while the buyer’s stamp duty and new residential stamp duty were both halved to 7.5 per cent. Moreover, stamp duty was suspended for eligible overseas talent buying homes in Hong Kong.

These measures are welcome as they will improve not only market liquidity but also the quality of life of home upgraders. They also send a positive message amid Hong Kong’s push to attract talent.

The relaxation of the spicy measures, as the government acknowledged, was a compromise between different interests. It reflects the inherent contradictions in Hong Kong’s private housing market.
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Private residential property can be both an investment and a home. While buy-to-let investors would like to see all spicy measures scrapped to lower their transaction costs, homebuyers want the property cooling measures to remain to help make prices affordable. Since roughly half of Hong Kong households are homeowners, with the other half tenants, any change to policy measures will hurt either side.

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