Hong Kong Chief Executive Leung Chun-ying may address the city’s housing crunch when he gives his first policy address tomorrow, as he seeks to boost record-low popularity and move on from an opposition impeachment bid.
With housing prices double what they were four years ago, the government must tackle the city’s crisis “without delay,” Leung wrote in a blog post ahead of his first policy speech since he became chief executive in July.
Leung, who came to office on campaign promises to improve the lives of poor and middle-class citizens, may announce more measures to boost Hong Kong’s land supply. The city faces challenges that include property prices and pollution that have made it the most expensive and one of the smoggiest financial centers in the world.
“He will focus on livelihood and economic issues including housing because that is the expectation of the people who supported him,” said Ma Ngok, a political scientist at the Chinese University of Hong Kong. The public will judge Leung on “whether he has what it takes to tackle livelihood and deep-rooted issues with effective measures,” Ma said.
Leung must balance the demands of Hong Kong’s people and Chinese leaders including Communist Party General Secretary Xi Jinping, who expressed his support for the chief executive last month.
Leung is the least popular Hong Kong leader after six months in office, and his support continues to drop, according to survey data from the University of Hong Kong’s Public Opinion Program. He has support of 48.9 on a scale of 0 to 100, according to a survey the program conducted from Jan. 2 to Jan. 9. That’s down from 49.2 from the month before, and his approval rating is 31 percent, the lowest since he took office, it said.
Speaking to reporters before a meeting of his cabinet today, Leung said Hong Kong has a number of “deep-rooted” problems. He said the government is “determined to work with the people and address these problems that Hong Kong faces.”
Leung may look to Singapore as he sets his policy goals. Seeking to battle record home prices, the island state’s government Jan. 11 announced measures that included higher stamp duties for home-buyers.
“A large part of C.Y.’s decision is tied to his popularity,” said Alnwick Chan, a Hong Kong-based executive director at Knight Frank LLP, a property broker. “ Curbing property prices is pretty much the only thing that can win him some applause.”
Hong Kong’s benchmark Hang Seng Index has risen 20.1 percent since Leung took office on July 1 last year. While he was selected by a 1,193-member panel comprised of billionaires, lawmakers and professionals, Leung campaigned on a promise to ease a wealth gap that’s the worst since records started being kept in 1971.
Housing is the most important issue for the government to tackle, according to a poll published Dec. 31 by the University of Hong Kong Public Opinion Program. The survey of 1,019 people, conducted Dec. 14 to Dec. 17, said 41 percent ranked housing as the top issue.
Hong Kong’s economy is expected to grow 3.9 percent in 2013, according to a forecast by the Asian Development Bank published in October 2012. The city’s GDP increased 1.3 percent in the third quarter, according to government data.
The city’s home prices have doubled over the past four years, surpassing their 1997 peak, and Hong Kong is now the most expensive place to buy an apartment, according to property broker Savills Plc. An 800-square-foot apartment in the middle-class Taikoo Shing neighborhood sold for HK$8.88 million ($1.15 million) on Jan. 10, according to data from the Centaline Property Agency. That’s more than six times the December U.S. median home price of $180,600.
To implement his agenda, Leung will have to go through opposition lawmakers who orchestrated a no-confidence vote and Jan. 9 bid to impeach him over illegal additions at his home. Leung won the chief executive job after casting doubt on the integrity of his main opponent, Henry Tang, following revelations that Tang’s wife built a basement with a wine cellar and movie theater at their house without government approval.
Leung survived both opposition initiatives. Now he and Hong Kong’s Legislative Council need to show they can work together to tackle the issues that matter to its 7 million residents, said Richard Vuylsteke, president of the American Chamber of Commerce in Hong Kong.
“If Hong Kong tries to stay top competitor in this part of the world -- and globally for that matter -- it’s got to be government working together,” Vuylsteke said.
Since Leung took office, his government has introduced three sets of property measures, including a new tax for home buyers who are not permanent residents in the city.
Leung has approved an increase of the minimum wage to HK$30 per hour, the first raise of the wage floor since it was implemented in 2011. The government also introduced a HK$6 billion subsidies program for the elderly.
The government plans to ban high-polluting vehicles while offering subsidies to replace others to reduce smog, Christine Loh, undersecretary for the environment, said in an interview. Poor air quality has made Hong Kong the world’s most polluted financial center and is responsible for more than 3,000 premature deaths a year in the city.
Rising rents and property prices have increased the cost of doing business and the government should come up with a plan for commercial property development, according to the Hong Kong General Chamber of Commerce.
“The cost of business going up is definitely a major concern because if Hong Kong isn’t competitive enough, people will just vote with their feet,” said Shirley Yuen, chief executive officer of the chamber, which represents 4,000 companies in the city.