HK chief executive vows to tackle housing crisis

Hong Kong Chief Executive CY Leung has pledged in his first policy address that his government will put tackling housing problem top on the agenda amid widespread public concern over the heated housing prices.

"Shortage in the supply of housing has pushed up property prices and rental substantially", Leung, who took office last July, told lawmakers on Wednesday.

Leung said that more land will be supplied for housing development so that around 128,700 new homes are expected to be built in the short-to-medium term.

Kelvin Lau, Senior Economist of Standard Chartered Bank, observed that the government has found the root cause of the housing affordability problem, which is the shortage of land and housing supply.

"While immediate impact on the residential property market could be limited as much of the new supply will not come that soon, we are encouraged by the bigger role the Public Rental Housing is set to play and the first steps taken in securing more land for housing", Lau said, "Key is for the government to stay nimble when actually implementing such policies over the next five to ten years in response to actual market conditions then."

Public Rental Housing is being provided by Hong Kong government to those whose income is below the level set by the government and cannot afford the rental price of property market. Hong Kong's public rental housing accommodates nearly 30 percent of Hong Kong residents.

Heng Sheng Bank economist Ryan Lam described the housing policy as the initiatives to alleviate shortage of supply.

"We see latest property measures as a significant step towards addressing the fundamental imbalance in the residential sector," Lam said.

Lam thought that in contrast to ad hoc demand-side measures adopted last year, these measures are likely to generate lasting effect rather than short-term psychological effect.

Senior Executive Director of Hong Kong Property Jeffrey Ng said the policy address sets out a clear vision for the property market in both short-term and long-term, and tries to tackle the soaring housing prices through property supply-side measures including increasing supply of subsidized housing and private residential housing.

Jeffrey Ng believed that the government has provided different income classes with various types of housing, and a reasonable housing system make it possible for Hong Kong people to improve their living standard through efforts, which creates a healthy environment for the long-term development of Hong Kong property market.

However, some critics said that Leung's policy is short of new viewpoint. Without new measures to curb housing prices, the property market may see price rebound.

Jennifer Wong, partner of KPMG China, noted that the address does not provide concrete long-term housing development plan with regard to infrastructure, supporting measures of new-developed community such as medical treatment, transportation, education and so on. She warned the government that they should bear an overall scheme in mind when developing new land.

"In addition, the increase of the plot ratio of buildings will lead to higher building density, and that will make Hong Kong a worse air flow city," Wong added. "The air pollution problem should also be taken into account by the government".