Hong Kong Homes Unaffordable After Price Surge, Leung Says
Hong Kong Chief Executive Leung Chun-ying pledged more measures to tackle record home prices, after a surge this year made accommodation unaffordable for many people in the city.
The number of applicants on the city’s public housing waiting list is approaching 200,000, Leung said today in his first address to the Legislative Council since taking office on July 1. About 65,000 private residential units are expected to be available in the next three to four years, he said.
Hong Kong is the world’s most expensive place to buy a home after prices advanced more than 90 percent since early 2009 on a lack of new supply, an influx of buyers from China and record low mortgage rates. Leung is seeking to fulfill campaign pledges to tackle a record wealth gap and high home prices after student protests and the resignation of a key official derailed his policy goals.
“Tackling the housing problem is a top priority,” Leung, 58, told lawmakers. “Property prices and rentals have continued to rise by such an extent that they are now beyond people’s affordability.”
The Hang Seng Property Index (HSP), which tracks nine developers, has gained 28 percent this year, more than the 16 percent advance in the benchmark. Cheung Kong (Holdings) Ltd., Sun Hung Kai Properties Ltd. and Henderson Land Development Co. are among the city’s biggest real estate companies.
Initial measures announced last month by Leung to cool the property market, including making more land available and restricting some sales to local residents, have failed to stop an up-tick in prices. The city’s de-facto central bank also limited the maximum term on new mortgages to 30 years in September.
Developers in Hong Kong are this month preparing to sell more than 3,300 units, the most homes in six years, according to realtor Midland Holdings Ltd.
Hong Kong’s currency is pegged to the dollar, forcing it to track record low interest rates in the U.S., even as nations including Singapore signal that they will act to prevent asset bubbles. Some residents in the city pay daily rates for a bed space that resembles a cage, while others live in apartments that are divided into smaller units for rent.
Leung today also said he plans to set a poverty line with reference to international standards as a first step toward improving the housing conditions of people who are living in “cage homes,” “sub-divided flats” and “cubicle apartments.”
In a survey conducted by the University of Hong Kong’s Public Opinion Programme from Oct. 4 to 10, Leung’s popularity rose to 49.2 from a low last month of 46 on a scale of zero to 100. His popularity took a hit after thousands protested last month over a government proposal for Chinese national education classes, which protesters said casts Communist Party rule in China in too favorable a light.
Closer ties with China had stoked concern among Hong Kong residents over a loss of the city’s autonomy. Leung has to balance discontent over competition for housing, school places and hospitals from mainland residents, with the increasing reliance the economy has on spending from across the border.
“The relationship between Hong Kong and the mainland is complementary and mutually beneficial in nature,” Leung said, adding that the government is aware of the rising tension.
Leung also said that the government will “vigorously” tackle the city’s air pollution. It is considering phasing out old vehicles and rerouting public transport, he said.
Hong Kong’s polluted air causes more than 3,000 premature deaths a year, according to the Civic Exchange. The research group said in a statement on Jan. 12 that 49 million doctor visits “can be attributed to Hong Kong’s persistently poor air quality” since 2005.
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