Published on March 7, 2014
China HONG kong “One China, Two Systems”
Contents 1. 2. 3. 4. 5. Housing Supply Issues The Governments Approach Examples of Housing – Good vs Bad Summary Questions and Answers 10 mins
1. HOUSING SUPPLY Issues
1068KM2 6.9M / = 5385 Persons 2 per km area Population HIGH Population DENSITY Data Source: Yuen and Yeh (2011)
70% of 75% of Hong Kong is countryside Hong Kong is HILLS and Slopes HIGH Population DENSITY Source: Agriculture, Fisheries and Culture Department (2014)
HIGH Population DENSITY Source: Agriculture, Fisheries and Culture Department (2014)
1. In Hong Kong land is government owned. 2. It is subdivided before being leased to private developers. 3. One of the main sources of income to the government is the sale of leases through auction and tender. 4. It represents up to 30% of government income. Government Controlled LAND Data Source: Nissim (2011)
THE RESULT: Increased LAND prices
Country 12-month % Change 6-month % Change Global House Price Index 2012 to 2013 25 Change as % Rank 23.6 20 15 10 5 4.3 0 World Average Hong Kong High House Prices Data Source: Knight Frank (2013)
GDP PER CAPITA $50,000 $40,000 $30,000 $20,000 $10,000 $0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 High House Prices Data Source: Google Public Database (2014); World Bank
Data Source: Chi-Fai (2012), South China Morning Post Income Inequality HONG KONG Total Income HONG KONG AS 10 PEOPLE Poorest Richest
$80,000 GDP PER CAPITA Vs National average salary $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 GDP PER CAPITA National average salary Income Inequality Data Source: United Nations (2013)
THE RESULT: Price to income ratio Affordability Index U.k. Average 7.74 U.K Average 1.73 27.06 00.57 Lack of Affordability Data Source: Numbeo, 2014
2. GOVERNMENTS APPROACH
“the community endorses the recommendation that the Government should adopt a supply-led strategy, continuing to increase housing supply and enhance the role of public housing.” 2014 Policy Address, Para 141 Increasing Supply of Housing
Population by housing type (Currently) 29.7% Public Rental Subsidised Home Ownership 52.8% Private Permanent 17% Temporary Increasing Supply of Housing Data Source: Information Services Department (2013)
“The new target is to provide a total of 470 000 units in the coming ten years, with public housing accounting for 60%. To meet the new housing supply target, the Government aims to provide an average of about 20,000 PRH units and about 8,000 HOS units per year” 2014 Policy Address, Para 142 Def. PRH: Public Rental Housing HOS: Subsidised Home Ownership Housing Focusing on Public Housing
“Government aim to maintain the current waiting time for public housing (avg. 3 years)" Applicants on Waiting List 250,000 228,400 200,000 189,500 150,000 100,000 152,500 114,400 50,000 0 1 2009 2 2011 3 2012 4 2014 Focusing on Public Housing Data Source: South China Morning Post
Increasing Permitted Plot Ratios Except for the north of Hong Kong Island and Kowloon Peninsula, which are more densely populated, the Government considers it feasible to generally increase the maximum domestic plot ratio currently permitted for the other “density zones” in the territory by around 20% as appropriate. 2014 Policy Address, Para 122 Def. Domestic Plot ratio: A measure of site-to-building levels (Chapter 2, Hong Kong Planning Standards and Guidelines) Densification
Increasing Permitted Plot Ratios Plot Ratio: 1.5 Tai Wo Ping Plot Ratio: 3 Kowloon Tong Plot Ratio: 5 Hung Hom Plot Ratio: 6 Quarry Bay Plot Ratio: 8 Ma On Shan Sai Wan Aberdeen Centre Densification Source: City Planning Consultants Ltd (2005)
Rezoning and Infill Development The Plan Departments is conducting a new round of Area Assessments of Industrial Land in the territory, which focuses on the industrial and commercial sectors’ demand for land and space, and will rezone for residential use the industrial land near residential areas where industrial activities have greatly reduced. 2014 Policy Address, Para 134 Densification
Rezoning and Infill Development The Government has identified about 80 additional Green Belt sites and Government, Institution or Community (GIC) sites in various districts with a total area of over 150 hectares with the potential to be rezoned for residential use. 2014 Policy Address, Para 120 Increasing Supply of Land
Tax Introduced Properties worth below HK $2 million now incur stamp duty of 1.5% Tax Doubled Properties worth above HK $2 million now incur stamp duty of 8.5% Reducing Market Demand
3. Examples of Housing The Good The Bad
The Numbers Number of people living in subdivided flats Number of subdivided flats Number of applicants on waiting list of for public housing 171,300 66,900 228,400 Subdivided Housing Data Source: Wilson Housing Authority
Exit to staircase blocked Nearest exit is to far away from Apartment 1 Internal walls are unlikely to be fireproofed Corridor is too narrow Bathroom is installed on the balcony Modified Apartment Original Apartment Staircase Apartment 1 Kitchen Bathroom Bathroom Apartment 2 Bathroom Kitchen Living Area Apartment 3 Entrance Bathroom Kitchen Bathroom Apartment 4 Balcony Subdivided Housing
Average Housing Unit Size Subdivided Housing 20m2 Hong Kong 45 China 60 United Kingdom 76 Japan 95 Canada 181 USA 201 Subdivided Housing Data Source: Wilson (2013)
“Caged-homes” are categorised as “Bed-space Apartments” by the Hong Kong Government. The term “Bed-space Apartment” refers to a house that contains 12 or more people who rent individual bed spaces. It is legal to run Bed-space Apartments, but property owners must obtain a special license from the Bedspace Apartment Ordinance. Caged Homes
Sau Mau Ping (I) Estate Wah Fu Estate Ma Hang Estate Cheung On Estate Tak Tin Estate Wo Ming Court Chung Ming Court Housing Department (2014) Tsz Wan Shan Estate Public Housing Lei Cheng UK Estate
Mark V Twin Tower Harmony Rural Slab Trident Concord New Cruciform Housing Department (2014) Mark III Public Housing Mark I
10.6 to 52.2 33.1 to 39.9 17.0 to 52.5 11.7 to 53.1 11.8 to 55.6 39.0 to 60.0 37.0 to 59.0 Flat Size (m2) Housing Department (2014) 23.1 to 46.5 Public Housing 21.5 to 65.1
Community Space Playground Arts and Green Space Access Secured Entrance Recreational Space Public Housing Data Source: Housing Authority. Google Street view.
Source: Centadata (2014). Yuen Property Agency (2014). Private Housing Saleable area 177 Square Metres (m2) Price to buy: £1.89 Million (UK Pounds) Price to rent: Unknown Description: 3 x bedroom Type: Semi-detached house Location: Semi-urban Facilities: 24-Hour Security, Clubhouse, Sauna and Jacuzzi, Swimming pool, Golf range, Child playground and pool.
Source: Centadata (2014). Richland Property (2014). Private Housing Saleable area 122 Square Metres (m2) Price to buy: £777,000 (UK Pounds) Price to rent: £3,700 (UK Pounds) Description: 2 x bedroom Type: Low rise apartment Location: Semi-urban Facilities: 24-Hour Security, Equipped kitchen.
Source: Centadata (2014). Squarefoot HK (2014). Private Housing Saleable area 125 Square Metres (m2) Price to buy: £1.5 Million (UK Pounds) Price to rent: £2,929 (UK Pounds) Description: 3 x bedrooms Type: High-rise apartment Location: Urban Facilities: 24-Hour Security, Clubhouse, Gym, Swimming pool. Equipped kitchen.
Ranking (In My Opinion) 1. Average Earner Pros: Affordability. Amenities. Security. Quality of life. Cons: Affordability. Property size. 2. Pros: Affordability. Amenities. Security. Cons: Safety issues. Lack of space. Social stigma. Limited supply. Eligibility. 3. Pros: Affordability. No waiting time. Cons: Safety issues. Lack of space. Hygiene and sanitation standards. Lack of facilities. Inadequate ventilation and associated health problems. 4. Pros: Ability to socialise. Affordability. Cons: Security issues. Lack of space. Hygiene and sanitation standards. Male dominated. Extremely low quality of life. Increased risk of mental illness and other health issues. Lack of facilities. No privacy.
Summary Housing Issues: Hong Kong has a limited amount of land. Purchase of land has a high administration costs. Houses prices are high because of a large amount of foreign investors (from mainland China and beyond) Housing is not affordable to the local population. Government Approach: Increasing housing stock. Increasing public housing to 60% to meet current demand (3 years and rising) and to address affordability issues. Densification through rezoning, infill development, increasing plot ratios and greenfield development (where permitted). Cool the private housing market by reducing the demand from foreign investors (through increasing costs and tax)
Yuen, B., Yeh, A. (2011) High-Rise Living in Asian Cities. Springer Agriculture, Fisheries and Culture Department. (2014) Hong Kong the Facts: Country Parks and Conservation [Online] Available at: http://www.afcd.gov.hk/english/country/cou_lea/the_facts. html (Accessed 27 February 2014) United Nations (2013) Human Development Report [Online] Available at: http://hdr.undp.org/en/media/HDR_2013_EN_complete.pd f (Accessed: 30 February 2014) Numbeo (2014) Property Price Index by Country [Online] Available at: http://www.numbeo.com/propertyinvestment/rankings_by_country.jsp (Accessed: 02 March 2014) Knight Frank. (2013) Residential Research – Global House Price Index [Online] Available at: http://resources.knightfrank.com/getnewsresource.ashx?i d=c802b446-9d21-49ec-b338-0b06ec826d98&type=1 (Accessed 30 February 2014) Information Services Department (2013) Population – The Facts [Online] Available at: http://www.gov.hk/en/about/abouthk/factsheets/docs/pop ulation.pdf (Accessed: 02 March 2014) World Bank (2014) Public Data – GDP Per Capita 1960 to 2012. [Online] Available at: https://www.google.co.uk/publicdata/ http://online.wsj.com/news/articles/SB10001424052702303 661904576452982242744572 Chi-fai, South China Morning Post (2012) The Good, The Bad and The Dirty. [Online] Available at: http://www.scmp.com/article/1005287/good-bad-and-dirty (Accessed: 30 February 2014) South China Morning Post (2014) More Young People Drawn to Public Rental Housing [Online] Available at: http://www.scmp.com/news/hongkong/article/1395251/more-young-people-drawn-publicrental-housing (Accessed: 28 February 2014) Nissim, R. (2011) Land Administration and Practice in Hong Kong. 3rd edn. Hong Kong University Press: Hong Kong. References
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