Population Mobility, Tenure Choice and Institutional Factors

Abstract

The Hong Kong government is involved deeply in the housing market. It provides public rental blocks as well as subsidised housing for sale. Government intervention has created various institutional factors in the form of relocation restrictions and subsidies. Little research has been done in the past to address how mobility is affected by institutional factors, in terms of the unique tenure structure in Hong Kong. This research aims to bridge this gap. It is found that government policy has a significant effect on the mobility of households, in particular the public rental sector. Further, the patterns of tenure choice are significantly different for households of public and private sectors. There are signs that the government is intending to minimise its role in the housing system. The suspension of the HOS programme together with the cancellation of loan subsidies could further restrain the mobility of public sector households. Institutionally induced spatial lock-in among public sector households will be aggravated in the near future. It is recommended that the loan scheme should be reinstated to provide an alternative and incentive for the households in the public sector to relocate and return their flats to the Housing Authority. This can help relieve the financial pressure in the face of a budget deficit because loan subsidies are more cost effective than subsidies in kind.

Keywords:

• Housing policy
• population mobility
• tenure choice
• Hong Kong

Acknowledgements

The authors would like to thank the referees and others who have contributed to this article. Special thanks go to Mr Ka-hung Yu for his valuable assistance. This research was supported by the Hong Kong RGC CERG (B-Q364 & B-Q664).

Notes

1. As an alternative, HOS owners are also allowed to sell their HOS flats to the HOS secondary market after the five-year restriction period expires without paying the premium to the HA. The difference of the HOS secondary market from the open market is that this market only comprises tenants of rental housing managed by the HA or the Housing Society (HS), residents of Interim Housing and green-form applicants (Housing Authority, 2006. Available at http://www.housingauthority.gov.hk).

2. Persons who had internally migrated were those whose area of current residence was different from the area of original residence five years ago. In defining internal migration, a change in the area of residence refers to a move (a) from a District Council (DC) district to another DC district; or (b) within a DC district in the New Territories (NT), from a new town to another new town, or from a new town to other areas in the district or vice versa. This definition excludes persons who had moved within the same district within the past five years.

3. According to the Housing Authority, a household is required to pay either 1.5 times or double net rent plus rate as appropriate, if the household's income exceeds the corresponding Subsidy Income Limit.

4. On 21 November 2005, the Court of Final Appeal (CFA) dismissed the appeal lodged by a public housing tenant against the HA's decisions to defer reviewing the rents of individual public housing estates in 2001 and 2002. The CFA's judgment clarifies HA's statutory obligations under the Housing Ordinance in so far as rent review is concerned. It also defines the circumstances under which the 10 per cent median rent-to-income ratio (MRIR) cap applies. The Judicial Review cases underline the importance of identifying an alternative rent adjustment mechanism that is more viable and helps to promote the long-term sustainability of the public rental housing programme (HA, 2005. Available from http://www.housingauthority.gov.hk).

5. Probit analysis is not used because this procedure is designed mainly to measure the relationship between the strength of a stimulus and the proportion of cases exhibiting a certain response to the stimulus. It is useful for situations when there is a dichotomous output that is thought to be influenced or caused by the levels of some independent variable(s) and is more suited to experimental data, which is not the case in this research.

6. According to the HA, the sale of the remaining HOS flats will resume in year 2007.