07/08/2019
Hong Kong Housing – Supply & Affordability
In face of housing trouble, Hong Kong residents save on daily food consumption, drinks, entertainment and their clothing to catch up with the "getting on the track of housing", bought a house and step in the deep sea without survival; laid down life debt without lifestyle and of joys. In terms of buying a flat, to rent a house for family accommodation, that was a real joking for them unable to escape from the brick-paved cage and became a “House slave” to the life. House Slave is a new term recently in Hong Kong atmosphere. What and how the Hong Kong residents or people became their life like that way? It is a community problem in face of immediate risky. When we look back the cause for the mentioned "House slave" may be reviewed by the signing of the Sino-British Joint Declaration by the Chinese and British Governments in 1984.The signing of the Sino-British Joint Declaration in 1984 condemned the granting of not more than 50 hectares of new land each year in Hong Kong, it is a dead statement to laying the fatal cause which for land use shortages and affected the property markets totally. However, most of Hong Kong residents were not aware of that and keep to invest and preferences to their luckily on gambling(investments)at the same time, Hong Kong people are not tired of imaginations, and even su***de like to borrow highest rate money to buy (Invest) on property, imagination and expectation had become "the key to getting rich".
The figure on government in January 1993, showed the Rates Property Valuation Department's private residential price index was 84. Points, but terrible to knew that until 1997; 167 points that double to the aforesaid figure.
Dark season was found from 1997-2002, the Property prices plummeted directly. Mr. Tung Chee Hwa (the first Chief Executive), announced the housing problem in Hong Kong could be completely solved and stated the "85 000 Housing Policy". Unfortunately, a few months after the property price index rose to a peak of 172.9 points, the housing bubble burst, and a year later the index plummeted to 95.6 points, and Hong Kong's economy suffered years of deflation and property market damage as a result of the financial status broken.
Reviewed that in 2002-2008 Property market bottom rebound slow and caused the financial tremendous down. Willing to "save the market", Secretary for Housing and Planning and Lands, Mr Sun Ming-yang, issued the immediately policy included the abolition of land auctions and the suspension of HOS flats in November 2002 in order to reduce land supply and government intervention to stabilize the property market. The cat told us it was failure to achieve the policy purpose. Unfortunately, policy has not kept pace with changes, and when property market briefly rebounded, God make a joke to Hong Kong people again, the "Sands Outbreak" broke out in2003, and 58.4points to the bottom index fell to July2003.
After 4 years Hong Kong people survived hardly after the outbreak, and the property price index returned to 100 points by the end of 2007. That was a turning point when recovered from the finance, but the property market was destroyed, and all Hong Kong property owners upset and felt disappointed. Desperate people went immigration and sold their property as to away of risks.
The property market has repeatedly price to the top, in 2008 by the impact of the financial tsunami in the United States, property prices first fell and then rebounded, the growing up purchasing price kept away from the purchasing power of the Hong Kong public, It is ridiculous that the property market depressing during the next 10 years, Government has repeatedly offered a variety of stamp duty "hot tricks" to suppress the property market in 2015. The property market fell slightly in the year but rose 28th Months to this year 7 Month 395. Prices only slightly fell.
international financial center VS property prices?
Hong Kong has always prided itself on being an "international financial centre", but the characteristics of "openness" and "free movement of capital" have laid the grounding for the housing market. The quantitative easing (QE) measures in the United States and China's 4 trillion-yuan stimulus package have led to a flood of money. As an international financial center, it is difficult to avoid hot money inflows. Hot money sprang to a long period of low interest rates, after adjusting for inflation, real interest rates fell to negative, meaning that holding cash is like a loss, disguised to force the public to buy property investment to preserve value.
Property prices were not unique to Hong Kong and that all major cities faced the same problems, but political and cultural considerations had become a "fatal blow" to the people of Hong Kong. The separation of the Mainland and Hong Kong is very different from the political, economic and legal systems of the two places. Although it is also China, the differences between the two places make it difficult to persuade many Hong Kong people to move to the Mainland to live there unconsciously.
Chinese "brick preservation" mentality
Unlike overseas countries, foreigners generally accept the concept of "life-long rental", chinese culture focuses on "living and working in peace" and "taking root on the ground", and the concept of "brick first" has led to a strong demand for property in Hong Kong. The Government has also been promoting "home ownership-led" so that Hong Kong people should have a "house-in-hand" thinking that the "financialization of housing" is gradually emerging, and for Hong Kong people, housing has long been not simply regarded as a residence, but as an investment product. Whether it is a home ownership or investment, no owner ever expects it to depreciate, and any policy that affects the return on investment of the property is almost impossible to get the owner's support.
Insufficient supply Housing Policy "White Paper"
The imbalance between supply and demand has also damaged Hong Kong, with the Hong Kong Government pushing for a "Sun Nine" rescue policy in 2002, but after the economic recovery, it has not completely abolished the "Sun Kyu", continued to cease the construction of HOS flats and sandwich houses, and then limited to resume land sales and land-salacity, and the property market is gradually dominated by private housing, public housing got loss of its position act as a counterweight. The depressed in the property market caused private property developers to reposition their business strategies, private residential completions downsize sharply and oversupply for years to some time.
The Government has repeatedly launched the "hot trick", but caused the second-hand transaction messed, purchasers had no choice, only to jump into the high premium of the first-hand new market, so that property prices under rigid demand, this argued action suppresses second-hand buildings supply, "you do not let others buy another floor, really can buy property to rent to people's owners are less and less, then how to have a lease?" 」
Intended growth up can't keep up property price increases
The most practical consideration for the public to buy a home is "the basic cost", reference to the Census and Statistics Department, the median income of Hong Kong fallen by 10% gradually during the past 20 years after inflation and life adjustment, but property prices have doubled in half over the same period, making it more difficult for the younger generation to "get on the bus".
no choice VS expensively rental.
Home ownership is difficult; a crowd of "shellless snails" can choose to rent instead. However, the increase in rents in Hong Kong has not been less than that of property prices. Reference to the analysis, if Hong Kong and Singapore, nine adults have public housing to live in, monthly rent only a thousand yuan, with this regardless of how expensive the property price. But Even if Hong Kong people do not buy property, they still must worry about rent.
Housing was a necessity and that in the face of unable to afford to buy a property; the public would eventually continue to enter the rental housing market unless they did not have to move out of the flats, they now live in. the demand for rental housing has been strong, private property rents have risen with property prices, and finally the shellless snails will also have to "rent expensively".
Mr. Chung pointed out that the rent controls that had been put in place could limit rent increases and prevent excessive rent burdens, while the right to rent would protect tenants' right to renew their tenancy, but after the cancellation of the two, the owners now needed only one month's notice period to drive away tenants, and the lives of a group of "rent slaves" could not be said to be secure.
Huge demand for public housing, and it's hard to say how to live in a cage.
Home ownership and rental properties far outweigh the burden of the general public, as a "safety net" of public housing applications income restrictions are strict, some members of the public also because of the increase in the minimum wage to increase monthly income, but also fell out of the public housing eligibility waiting list, or forced to switch to the private housing market. The other part of the monthly income exceeds the limit but cannot afford to buy a home of the "clutch" families, only for a long time in the private housing market expensive rent, or even live in the house. In order to avoid exceeding the income limit, some people would rather reduce their income than affect their applications. The historical clouds, the traditional Chinese culture and the policy of the shift, all these, so that hong Kong people unconsciously fell into the housing slave situation, all kinds of distorted things are staged daily, whether voluntary participation. Can we all be helpless to participate in this game with no way out?
Half of Hong Kong residents live in public housing, making Hong Kong's housing system very unusual. But more recently, Hong Kong has developed a very unusual three-story housing system since the housing policy decision dates back to 1953. We looked at a survey that said Hong Kong was so far the most affordable city in the world. While this is clearly not true - half of Hong Kong residents live in public housing, usually only 9 per cent of household income - the survey contains a central fact. Hong Kong's private housing market is very expensive. Singapore is a great counterfactual to truly understand Hong Kong's housing system. The housing systems in Hong Kong and Singapore are similar in many respects. This is because Singapore's housing system is based on Hong Kong (Hong Kong started the Public Housing Scheme 10 years earlier than Singapore). However, there are significant differences between the two systems, which create great differences. Let's start with the similarities - and then look at how they are different - to see how Hong Kong ends with such a strange housing system. The parallels between Hong Kong's housing policy and Singapore's are heavily dependent on public housing: the housing systems in both cities have declined since the 1990s, the number of units in private housing has grown even faster, despite the fact that both cities continue to build more public housing. Therefore, even if the absolute number of public housing continues to grow, the overall share of public housing will fall. The self-use of public housing: Although most public housing estates around the world take the form of subsidized rental housing, the Hong Kong model introduces home ownership. It's like a government-owned apartment: residents own the housing units they live in, and the government owns the building.
The Hong Kong model provides residents with a one-time capital contribution (they buy homes at lower prices) rather than ongoing rent subsidies (such as the traditional public housing model, where residents rent their homes at lower prices). As a result, residents can accumulate wealth by repaying their public housing interests. Public housing ownership is widely used in both Hong Kong and Singapore. There are several major differences between the housing system in Hong Kong and building. The Hong Kong model provides residents with a one-time capital contribution rather than ongoing rent subsidies (such as the traditional public housing model, where residents rent their homes at lower prices). As a result, residents can accumulate wealth by repaying their public housing interests. Public housing ownership is widely used in both Hong Kong and Singapore. The difference between public housing in Hong Kong and Singapore There are several major differences between the housing system in Hong Kong and Singapore, but they can be summed up in one key point: in Hong Kong, public housing is designed as a safety net, while in Singapore public housing is
The Annual Dermographia International Housing Affordability Survey (2019), conducted by urban planning policy consultancy Dermographia last year, included 309 cities in eight countries, The survey finds that an average household would take 20.9 years to be able to afford an apartment in Hong Kong, that is, if there were no other expenses to pay.
despite the expected downward adjustment, buying a home in the city would still be a very difficult thing to do, the Hong Kong Economic Journal reported. Simon Lee Siu-po, a senior lecturer at the School of Accountancy of the Chinese University of Hong Kong, believes that Hong Kong will most likely continue to see home prices rising as many of the city’s advantages – leading competitiveness, stable environment, ample job opportunities, low unemployment rate and no severe natural disasters – will keep luring foreigners to come to work and buy properties in the city.
the government needs to be proactive VS interfering property market.
Ian Brownlee says increasing the housing supply in Hong Kong won't necessarily lead to more people owning a home, as the policies and financing controls in place now effectively keep prices high.
Research shows that the affordability of Hong Kong's property market is not determined by supply. Regardless of supply, prices are always high. The real estate market has other unusual features. A large proportion (almost half) of all private homes is not insured. It implied that the community has enough cash to buy property without bank financing. There are few mortgages defeated means keeping repay mortgage promptly. No risk on banking system when mortgage generated profit. Demand-side control has no effect on lowering market prices, because people with enough wealth can still afford property. This can be seen in the current market.
