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How to help solve Hong Kong’s housing shortage? Reclamation, reclamation, reclamation

Stephen Wong, Deputy Executive Director of Our Hong Kong Foundation, discussed the city's housing problems. Photo: Sarah Graham/FCC Stephen Wong, Deputy Executive Director of Our Hong Kong Foundation, discussed the city’s housing problems. Photo: Sarah Graham/FCC

Hong Kong needs to find 9,000 hectares of land to reclaim in order to help ease the city’s housing crisis, according to public policy expert Stephen Wong.

The Deputy Executive Director of Our Hong Kong Foundation – a non-profit organisation seeking to promote the long-term and overall interests of Hong Kong through public policy research, analysis and recommendation – told the July 13 club lunch that a lack of long-term coherent debate on the matter, coupled with more than a decade in which there has been little or no reclamation in Hong Kong, had contributed to a shortage of land on which to build much-needed housing.

Wong said that 9,000 hectares of land – or 1.26 million units – was needed to ease the city’s shortage of housing, and that the government’s existing land development plans would only provide 5,300 hectares of land. He suggested that the remaining 4,000 hectares come from reclamation and change of use of industrial units, such as Kwai Chung Container Terminals. He said Hong Kong was built on reclamation, and suggested a large scale project would make up the government shortfall.

Wong concluded: “There can be no new towns without reclamation. Without reclamation… our inventory is depleting.”

A slide from Stephen Wong's presentation. A slide from Stephen Wong’s presentation.

In the past decade, he said, land shortage in Hong Kong had slowed down economic growth and led to a serious undersupply of housing, which in turn had created skyrocketing property prices that are unaffordable to the majority of people living in the city.

He explained: “In Hong Kong we only have 24% of land that is used to develop, so the remaining 76% is green areas.” This, he said, compared to 73%  developed land in Singapore. “We have high density compared with rest of the world,” he added.

Building new towns, he said, would take 20-30 years, and Hong Kong was already falling behind other major cities so needed to act now: “In the past 10 years we have no new towns. Where is our next new new town? In completion in the next 20-30 years. Of course there’s a problem in Hong Kong because we’ve done nothing for 30 years.”

Watch Stephen Wong talk about Hong Kong’s housing shortage

Hong Kong’s property market could be heading for another bubble, warns guest speaker Peter Churchouse

Peter Churchouse highlighted a bleak outlook for Hong Kong's property market Peter Churchouse highlighted a bleak outlook for Hong Kong’s property market

Hong Kong’s property market could be heading for another bubble, warned real estate expert Peter Churchouse, guest speaker at Wednesday’s club lunch.

The leading property market analyst said that 2016 activity indicates ‘the heat is coming back in to this market’, and added: “The risks in these markets are that we’re heading back into bubble territory.”

Having worked in real estate in Hong Kong for more than 30 years, Churchouse described the city’s property market as the most volatile in the world. He cited factors including the dollar peg and public policy as reasons for changeability. He said Hong Kong’s government had a vested interest in keeping land prices high because up to 30% of their revenue in recent years came from real estate.

He also levelled criticism at the government for pledging 90,000 new units in the city in the next three to four years, which Churchouse said was an overestimation.

The heat is coming back in to this market

“Over the years, going back to 1972/73, their forecasts have, on average, been out by about 30%,” he said, adding: “I will be extraordinarily surprised to see 90,000 units come to fruition.”

But his biggest swipe at the government was over plans to build in the city’s country parks, which Churchouse described as ‘a cop-out’.

His pessimistic outlook for Hong Kong’s real estate market followed a series of slides that mapped out its recent history. He spoke of how, at the time of SARS, 85% of all residential sales transactions were less than HK$3 million. Today that figure is 15%.

He warned the potential of a financial crisis in China was remote but real and would have a huge negative impact on local asset prices, adding after the talk ended that he believed China would go to great lengths to prevent a meltdown in the banking system.

Another concern raised by Churchouse was that the Federal Reserve appears to be at the start of a very gradual tightening cycle, which would have an effect on Hong Kong as it is pegged to the dollar.

He called for the government to scrap double stamp duty for commercial assets, calling it ’totally ridiculous and unnecessary’, and criticised the government controls on the market. He added: “If we see property prices corrected by 30, 40, 50%, we would see every reason for the government to roll back on those controls.”

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