Opinion | Hong Kong’s economic recovery hinges on having enough adequate housing
Between 2018 and the end of 2023, the world’s GDP increased by 13 per cent. Singapore’s increased by 12 per cent, while Hong Kong’s fell by 3 per cent. A year and a half after the end of the Covid-19 pandemic, Hong Kong’s economy is still sputtering. This malaise is attributable to long-term trends such as population ageing and a lack of new industries.
To grow Hong Kong’s economy, the government has instituted subsidies for research and development with the aim of creating new industries. It has also rolled out an array of measures aimed at attracting talent to the city.
So far, these policies have not had the desired effect. Real investment in Hong Kong’s machinery, equipment, and intellectual property has fallen from HK$278 billion (US$35.7 billion) in 2012 to HK$173 billion in 2023 despite the spending on innovation subsidies during the past 10 years. The labour force grew just 0.4 per cent between May 2023 and May 2024 despite efforts to attract more talent.
The fundamental problem with Hong Kong’s economy is that it does not have enough housing. Consider the choice that talented immigrants face.
According to the Urban Land Institute, Singapore’s average rent per square metre is 86 per cent of that in Hong Kong. The rents in Beijing, Shanghai, Shenzhen and Guangzhou are 52 per cent, 44 per cent, 39 per cent and 27 per cent of Hong Kong’s. If rents are significantly cheaper in competitor cities, why would talent move here?
Despite a lull since 2019 and falling prices amid rising interest rates, residential rents in Hong Kong are going up again. From May 2023 to May 2024, the rent index for units smaller than 1,000 sq ft increased by 5.5 per cent. This suggests Hong Kong’s housing shortage is deepening once more.
13:00
How Hong Kong’s housing market became among the world’s most unaffordable
How Hong Kong’s housing market became among the world’s most unaffordable
This is bad news for Hong Kong’s economic growth. Unless residential costs stop skyrocketing, entrepreneurs and innovators will find Hong Kong too expensive to live in and choose to take jobs and start businesses elsewhere. As a result, Hong Kong’s economy and global relevance will keep declining.
To power economic growth, we need bold reforms to quickly and significantly increase the supply of residential housing and reduce the misallocation of housing and land. First, we should build much more residential housing, especially higher-quality housing. The stock of subsidised ownership housing should be greatly increased. Agricultural land and brownfield sites should be developed with deliberate speed, and residential land sales must continue.
Second, we should rezone and upgrade our existing housing stock. Restrictions on use should be removed. For example, in older neighbourhoods such as Kwun Tong and Wong Chuk Hang, there is a surplus of industrial buildings that are underused and can be converted towards mixed use. The town planning process also needs to be reformed.
Third, we should reform our public housing system. Subsidised housing has become grossly misallocated to well-off and elderly households because of a rigid and antiquated rent schedule. As a result, young people and low-income households are left with no choice but to rent in the private sector. This misallocation has contributed to high rents for tiny private-sector units, a proliferation of cramped and unsafe flats and a lack of upward mobility.
One useful reform would be to make public-sector rents proportional to income. This way, subsidies are better targeted towards needy households and the proliferation of subdivided units in the private sector can be reversed.
Another useful reform would be for the Housing Bureau to relax restrictions on leasing and reselling public-sector units. This way, underutilised public-sector units can circulate to needy households while the elderly can move to more suitable housing, possibly elsewhere in the Greater Bay Area.
Contrary to some people’s fears, these reforms will not cause Hong Kong property prices to collapse. They will merely arrest a housing affordability crisis that is deepening once again. Immigration restrictions are looser now, the labour market is much tighter and the wealth of Chinese nationals is much greater. Hong Kong also sits near Shenzhen – one of China’s most youthful, dynamic and innovative cities – and there is highly elastic housing demand from skilled migrants to absorb increases in housing supply.
Housing and town planning reforms will raise social mobility, advance our mission to become an international talent hub and bring positivity and business dynamism back to our society. If the government adopts this approach, it will not be long before Hong Kong booms again.
Michael B. Wong is an assistant professor of management and strategy with a joint appointment in economics at the University of Hong Kong
A Hong Kong construction company linked to five workplace deaths in three accidents will have a ban on its operating licence lifted following a temporary court order, even as two of the firm’s six contracts have been terminated. The Development Bureau said on Wednesday that Aggressive Construction Company would remain on the government’s registered list
A robber tied up a shop assistant, rendered her unconscious and made off with Hermes bags and a Van Cleef & Arpels necklace worth nearly HK$3 million (US$382,170) in total in Hong Kong’s Tsim Sha Tsui on Wednesday. The 49-year-old female victim opened the first-floor store at Supreme House on Hart Avenue at about 9.30am,
Hong Kong singer Tommy Yuen Man-on has been arrested for allegedly stealing snacks from a supermarket, the Post has learned. Yuen, a former member of the defunct Cantopop boy band E-kids, was arrested on Wednesday after he was spotted acting suspiciously by patrolling officers in To Kwa Wan, police said. He allegedly stole items from
Unlock the Editor’s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Hong Kong’s property market was once seen as a financial outlier in Asia. It was defined by scarce land, strong legal safeguards and disciplined local developers. Even as mainland China’s property groups were engulfed in
Beijing’s point man overseeing Hong Kong affairs has begun a five-day fact-finding visit to the city, his third since taking office. Sources have said Xia Baolong, director of the Hong Kong and Macau Affairs Office, will focus on assessing the city’s progress on both development and security fronts. The Post examines the importance of Xia’s
Cathay Pacific Airways’ budget carrier, HK Express, expects passenger numbers to grow by up to 40 per cent this year despite feeling “some impact” from cuts to summer flights to Japan as a result of Hongkongers avoiding the country over earthquake rumours, its boss has said. HK Express CEO Jeanette Mao Jie-qiong said on Wednesday
Hong Kong police have arrested eight suspects aged as young as 20 in a crackdown on a cross-border syndicate that allegedly sold fake concert tickets for a total of HK$650,000 (US$82,800), with the Post learning that Taiwanese star Jay Chou’s fans were among those targeted. The force said on Wednesday that the suspects were all
Hong Kong authorities have rejected proposals to allow parents to split child tax allowances, citing concerns about administrative efficiency and the limited benefit to taxpayers. During a legislative council meeting on Wednesday, lawmaker Nixie Lam Lam suggested amending the law to introduce a default allocation mechanism for child allowances, such as according to income ratios,
A senior Beijing official overseeing Hong Kong affairs has arrived in the city for a five-day visit in which he is expected to meet representatives from the education and business sectors before giving a keynote speech on national security. Xia Baolong, director of the Hong Kong and Macau Affairs Office, arrived in the city at
Hong Kong will launch a database this year to identify high-risk carers looking after the elderly, with the city recording more than 470 suicides among older residents annually, accounting for over 40 per cent of all cases. Secretary for Labour and Welfare Chris Sun Yuk-han said on Wednesday that the government was in discussions with
Hong Kong authorities will ramp up penalties for those who repeatedly misuse public sports and recreation facilities, an official has said, noting authorities had handed out punishments for 13,000 such cases since the launch of a booking app in 2023. Raistlin Lau Chun, the acting culture, sports and tourism minister, said on Wednesday that the
The water pipe believed to have introduced black particles of bitumen into the freshwater supply at two public housing estates last month will be replaced by early July, the development minister has pledged. Secretary for Development Bernadette Linn Hon-ho also said on Wednesday that they had completed more than 1,500 requests from residents at Queens
Hong Kong’s anti-corruption watchdog has charged a hostel manager with allegedly stealing more than HK$900,000 (US$114,651) from his employer by altering booking records and making false claims about outstanding payments. The Independent Commission Against Corruption (ICAC) said on Wednesday that Li Kei-tat, 39, formerly an assistant lodge manager at Caritas-Hong Kong, faced a total of
The driver of a truck involved in a recent fatal crash has been apprehended, the Post has learned, marking the second arrest in connection with the accident. A source said on Wednesday that officers arrested the 49-year-old man over dangerous driving causing death. The suspect, a resident of Indian descent, allegedly drove the truck that
Hong Kong’s labour chief has stressed that importing workers contributed very little to the 30-month-high unemployment rate recorded for March to May, while highlighting measures introduced to protect residents from being replaced by cheaper overseas candidates. Secretary for Labour and Welfare Chris Sun Yuk-han said on Wednesday that the city’s 3.5 per cent unemployment rate
A 69-year-old hiker has died after collapsing on Hong Kong’s Wilson Trail in Tsz Wan Shan. The man, surnamed Ho, was found lying unconscious by hikers at around 9.13am on Wednesday on Section 5 of the trail. According to police, paramedics found Ho unresponsive. The Government Flying Service then dispatched a helicopter to airlift him
Mainland Chinese companies will use Hong Kong’s capital market as the launch pad for their global growth, according to an action plan signed on Wednesday with Shanghai to connect the premier onshore commercial city with the nation’s offshore financial hub. The two cities will expand the decade-old connect programme linking the stock markets of Shanghai
Mainland Chinese companies will use Hong Kong’s capital market as the launching pad for their global growth, according to an action plan signed on Wednesday with Shanghai to connect the premier onshore commercial city with the nation’s offshore financial hub. The two cities will expand the decade-old Connect programme linking the stock markets of Shanghai
The US$23 billion sale of global port stakes by Hong Kong’s CK Hutchison could be subject to substantial changes if it is not already on the verge of collapse, with Chinese and Panamanian authorities possibly rejecting the terms, legal and logistics experts have said ahead of the deal’s deadline for exclusive negotiation. Their analysis followed
Hong Kong authorities should immediately halt plans to build three artificial islands in waters off Lantau as the scheme may drive down bidding prices for land in the Northern Metropolis megaproject, a representative of the city’s major developers has said. Louis Loong Hon-biu, a lawmaker and also the secretary general of the Real Estate Developers
