Planning, Land and Affordable Housing in Hong Kong

Abstract

This paper investigates the approaches and the effectiveness of the government of Hong Kong in using the planning system and land policies to help provide affordable homes, widening the planning and affordable housing debate to urban systems in which governments possess both landownership and development rights. This paper argues that land and development right ownerships enable the Hong Kong Government to operate a massive public housing program to meet the housing needs of half the population at affordable rent and price levels, without having to resort to planning tools. However, the availability of subsidized housing still depends on other factors, notably government commitment and priority in solving housing problems. Landownership is less useful in regulating private housing prices as political and economic factors often override the situation. The empirical findings of this study suggest that land supply was often adjusted in response to the economic environment rather than shaping market outcomes. Hence, government ownership of land and development rights is found to be more effective in providing affordable subsidized housing to low-income families through the producer-subsidy approach rather than in regulating housing prices to enhance the affordability for private housing consumers.

Keywords:

• Housing affordability
• planning policy
• land policy
• regulatory intervention

Acknowledgements

The author wishes to thank two referees for useful comments on the original draft. All errors are, of course, those of the author.

Notes

¹ Rents for old estates are always lower than those of new estates because generally old estates have a low rent base and lower standards of amenities. In addition, households in these estates are usually in a more advanced stage of the family cycle and earn higher wages. Thus rents are more affordable.

² The government attributed the strong demand to several factors: rapid population growth due to increased immigration from China since the implementation of the ‘Open Door’ policy; higher rates of household split; more affluence, causing stronger aspirations to improve housing conditions, including the pursuit of home ownership; the pegging of the HK dollar with the US dollar, ensuring that the purchase of property would be a good method of protecting the value of savings; and the inflow of foreign capital into the property market (Planning, Environment & Lands Branch, 1994).