Shanghai Newspaper Interview - Hong Kon…

Q1. Can you describe briefly the nascence of Hong Kong’s public housing program and its dwindling importance in recent years, and elaborate on the reasons why there has been a stall in the construction of public housing in the last decade? A1. Simply put, Hong Kong’s public housing program can be said to consist of two components: public rental housing and the Home Ownership Scheme (“HOS”). The former was initiated in the year 1953 after a big fire destroyed a big patch of huts in Shek Kip Mei, with the aim of providing basic shelters for the homeless and the destitute; while the latter scheme was introduced in 1976 by Sir Murray MacLehose and was meant to provide subsidized self-owned homes for the low-income group in order to nurture a sense of belonging among citizens. The HOS had stringent rules regarding income qualification and resale, and the units were basically priced at a discount which approximately equaled the land premium, which had to be paid back to government on resale. These two housing schemes, along with private residential rental control measures which had been in place since the 50s, always operated effectively under the colonial government. But then after the Asia financial crisis hit in 1997, in the face of a property market debacle and wrath from negative-equity homeowners, CE Tung’s “85,000 flats a year” proposal got trashed, followed first by a complete revocation of rent control and then by Secretary Suen’s market-propping nine-point plan, which included indefinite suspension of the HOS and drastic cuts in land supplies. However, these measures which had been meant as short-term temporary measures were allowed to stay on and on, even after the property market went into a frenzy again in the period 2005-2010. Meantime, the Tsang government has been sitting on its hands and doing nothing about the scalding market, which is the chief cause for widespread grievances in society.

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