The Hong Kong government’s new Consultation Framework on Subsidising Home Ownership, is a masterpiece of cynical, pointless, consultation-farce. Usually, these public engagement exercises on health care finance, tax reform or whatever ignore some options altogether, while including others that are unacceptable or unworkable, plus one more. The citizen’s job is to spot the one the bureaucrats have already decided on. In this particular case, we don’t even have to do that.
The bottom line is: we must have a ‘healthy’ property market!
What is that exactly? It is one where everyone who has bought an apartment is sitting happily on a nice fat profit and yet, simultaneously, everyone who is yet to buy finds the prices deliciously attractive. Not possible.
On top of that, certain local characteristics make the idea of a ‘healthy’ property market even more elusive. Our currency peg denies the government the ability to tweak interest rates upward to cool asset price inflation, so officials just resign themselves to bubbles (and, in the case of housing minister Eva Cheng with her HK$60 million apartment for the kid, make a healthy profit by buying at the right time).
Most of all, the government itself is confused about its own purpose and that of physical space in this city. As things currently stand, the government’s primary raison d’etre is to raise revenue, and the main use for land is to be converted into that revenue. The interests of the people and the economy 
come second. The result is an artificial scarcity/expense of space for housing and business, and an economy dominated by a few families who act as tax farmers taking it in turns to distribute the small amounts of land the officials make available.
From time to time, buying a vaguely habitable home gets too beyond the reach of many Hong Kong people, and this leads to much whining. Tackling the root cause of the problem (also known as ‘the root cause of Eva’s 200% paper profit on her flat’) is obviously not going to happen. All we can do is sit back and wait for interest rates to rise. This Consultation is simply designed to give worriers and naggers something to do in the intervening period.
Note that the government is inviting us to consider ‘subsidising’ home ownership. This, like ‘socialized’ medicine to American conservatives, is a loaded term. What we are really talking about here is homes on which Cheung Kong, Sun Hung Kai or Henderson Land do not make a 50% profit margin, and the buyer does not contribute as much as usual to the government’s capital works reserve fund, much of which ends up flowing to privately-held construction companies owned by the same families that own the aforementioned real estate giants. It would be more accurate to call them non-subsidy homes: the purchaser does not have to subsidize the property tycoons.
My humble solution, crafted painstakingly in the shower this morning, is aimed to fix the problem of over-priced little apartments while at least possibly avoiding a sudden crash in prices, which would cause not only Eva but many other people great anguish – of the sort that had negative-equity homebuyers committing suicide back in 1998. The idea is to create a ‘healthy’ property market by ending the insistence that residential real estate can be both a home and an investment.
In a way, we already do this through the public housing estates. But these are deliberately designed to be nasty and undesirable, and are theoretically reserved for the poor. The better off can only either rent (ie, pay off someone else’s overpriced investment) or take out a mortgage on an investment of their own and work the next 20 years for the Lis, Kwoks or Lees.
Under my modest proposal, the government would look at a map of Hong Kong and notice the surprising amount of empty space (like out at Junk Bay) and land that could be freed up by evicting freeloaders like Disney, the Science Park, golf courses and cruise liner terminals. The resulting land – equivalent to maybe half of Kowloon – would be earmarked for fairly dense development of large apartments, say 1,000-1,500 sq ft. They would be rented to taxpaying families with children for an amount related to their income (say, 150% of their salaries tax bill). There would be no frills: no car parks, no club houses, no chandeliers in marble foyers – just an MTR station, bike racks and a public swimming pool. Anyone caught subletting would have a hand chopped off.
People who wanted to carry on buying and selling little concrete boxes would be free to do so in other parts of town. These new areas would be havens for people – maybe several hundred thousand households in time – who want to opt out of all that and just have a place to live in and put their savings into mutual funds.
Simple. Tomorrow, I will solve the Middle East.
Oh you and the property market. Change the channel. Get a life.
Sounds like Gold Coast to me.
As a British spook and provocateur, it is of course in your remit to constantly hammer away about the property market in Hong Kong. Perhaps some details from your glorious UK might enlighten your readers by way of comparison:
More than two million people find their rent or mortgage a constant struggle or are falling behind with payments.
Against a background of mounting debt across the country, increasing numbers of homeowners are having their homes repossessed, because they are no longer able to keep up with their mortgage repayments.
Second home ownership is pricing local people out of many rural areas.
Over 1.7 million households are currently waiting for social housing.
Some homeless households – many with dependent children – wait for years in temporary accommodation.
Families renting privately on low incomes have to put up with poor living conditions and little security.
The number of new households is increasing faster than the number of house builds.
And at the sharpest end, many hundreds of people sleep rough on the streets every night, cold and fearing for their safety.
(Source: Shelter UK)
But we don’t live in the UK, do we? We live here (if you can call it living). Hence Hong Kong being the place under daily examination and discussion.
The Hemlock sub-text is however that elsewhere is better or different or more rational. The agenda is also not clean or pure. An analysis of Hemlock will reveal not one iota of criticism of the UK for the various pickles Hong Kong is or was in. That speaks for itself. Ask yourself, Historian, what would a modern British spook do to subvert Hong Kong? Then you will see you have been reading it here for years.
Yes! Hemlock is a British SPY! Of course
Will someone please shoot the arsehole.
MarcFaber: “An analysis of Hemlock will reveal not one iota of criticism of the UK for the various pickles Hong Kong is or was in.”
Have you really read Hemlock, MF, or are you just some non-elected pro-Beijing hack doing his duty to “bring some balance” to this blog? Either way, here’s an ‘iota of criticism’ for your delectation. Taken from Page 14 of Hemlock’s book, wherein he baldly states that the British rigged public consultation exercises and stalled democratic change:
” … Britain’s colonial administration in the 1980s resisted local pressure for a more democratic political system. No changes were contemplated to the policymaking and executive functions, which were firmly in the grip of senior civil servants reporting to the British-appointed Governor. The relatively powerless Legco was all-appointed until 1985, when functional constituencies were allowed to elect some members. Two years later, Governor Wilson’s administration blatantly rigged a public consultation exercise to give the impression that the population was undecided on the timing of further reform. Such stalling became untenable on June 4, 1989 … [he then goes on to describe the reaction to and fallout from the Tiananmen massacre].”
FarkNeighbour, Hemlock has no such subtext. As a PR of HK he has every right to lampoon the good and the less good things about the place we call home. The ‘nasty’ British are gone, get over it. The only destabilising comes from the damage that HK’s officials do. If you could read Chinese you’d see far more scurrilous humour on a variety of witty blogs. Get your own blog or get a life. Either way, piss off.
British ‘spooks’ don’t need (or want) to subvert Hong Kong. The lunatics have been doing it for themselves since they took over the asylum in 1997.
…you got to be joking about putting money into thieving mutual funds with their high management fees?
Eva Cheng with that muscular neck will be an asset to HK’s rugby front row.
MarcFaber,
You have had your 15 minutes now be a good lad and ckuf off.
personally I like his idea. But then I’m just a normal middle class person who could never afford to buy the space that they’d want to live in…
Have you visited a public housing estate recently? The new ones are nicer than private housing. Lots of greenery, inexpensive shops, no bay windows to inflate the square footage, sea views from many estates. I’d rather live there than in the latest Cheung Kong scam.
As they say in the novels, you’re burnt Hemlock. Better get to the safe house. And stop writing in your own comments column.
Are you fine English gentlemen all benders ?
@gweipo – “I’m just a normal middle-class person”! Are you fuck – you’re a tai-tai married to an obscenely overpaid banker with two kids in obscenely over-priced education. Your income is higher and your lifestyle is more privileged than at least 98% of people in Hong Kong. That is not “middle class” by any reasonable definition.
Nonsense, Hemlock is clearly an Uzbek spy!
I get to go around o lof of public housing estates and the Fish is right: they’re actually not that bad. Compare a PHE with a private development next door (eg in Cheung Sha Wan with the Banyan place). They’re in the same area, PHE lack marble lobbies & swimming pools but the flats are a similar size and for the price difference they’re well worth it.
HK PHE are nothing like the hell holes of Britsih inner city council tower blocks.
The pigeons are circling Tbilisi. The pigeons are circling Tbilisi.
Pigeoncatcher will not resume.
Cousin Bill
But why only families with kids? There are few enough of them and they’re not to be encouraged anyway.
Perhaps a few blocks can be set aside solely for families with kids, then they won’t annoy everyone else.
And I say, as long as the property cartel blights our existence, we should keep harping on about it. So there.