The number of Hong Kong households living in poor conditions such as subdivided flats will increase by 2,900 to 122,000 over the next 10 years, the city’s housing minister warned on Wednesday, pointing to the recession as a possible reason for the rise while conceding he lacked “concrete answers”.
Secretary for Transport and Housing Frank Chan Fan made the grim assessment as he unveiled a housing supply target for the next decade unchanged from last year’s estimate – 430,000 flats for the public and private sectors combined.
But two government advisers said the supply target would gradually decline over time with a slowdown in net household growth, with one calling for more land to be allocated to the private sector to build flats.
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The yearly adjustments to the target under the Long Term Housing Strategy are determined by quantitative projections of different demand components, including the number of households, those displaced by redevelopment, people living in undesirable environments and overseas buyers who are not selling or leasing their flats.
The government has identified lack of affordable housing as one of the most crucial issues facing the city.
This year’s projection found the number of households living in poor conditions would rise from 119,100 to 122,000, a 2.4 per cent increase, over the next 10 years. They include people living in temporary housing such as rooftop huts, industrial or commercial buildings, subdivided flats, cubicles and bedspaces.
“I believe the surge is related to the shortage of housing supply and the economic downturn, but the [estimates] were based on 2019’s situation. I do not have a concrete answer, but I believe these are the possible reasons,” said Chan, who is in charge of reviewing and updating the city’s rolling 10-year housing strategy each year.
While the government had committed to providing more than 15,000 transitional housing flats for those awaiting public housing, only about 5,000 were under construction or had already been built, he said.
The government is required to ensure that over 10 years 30 per cent of new flats are in the private housing sector and 70 per cent in the public, the latter translating into about 301,000 units.
Andy Kwan Cheuk-chiu, an economist and a member of the committee that sets the formula for the annual estimates, said the unchanged supply target “makes sense”. But he expected the overall demand for housing would drop after 2040 mainly due to Hong Kong’s ageing population, which would result in a lower target in the future.
“There is a decline in the number of household formations,” Kwan said. “That is the largest part of the model, so it is going to affect the projection. We are talking about many old people moving to nursing homes, and those houses that they occupy will eventually be vacated. So eventually ... the net increase in household formation will become a net loss every year.”
Lau chun-kong, a member of the now defunct Task Force on Land Supply and a vice-chairman of the Institute of Surveyors, agreed the supply target would gradually decrease as the household figure fell but said the government’s public-private split of 70-30 left too little supply of the latter.
He noted that while the supply from the private sector had remained at similar levels in recent years, the new flats were smaller than before. “This has resulted in a lower living standard,” Lau said.
In her policy address in November, Chief Executive Carrie Lam Cheng Yuet-ngor announced the administration had found enough land to meet its 10-year target for public flats based on last year’s estimate. About 330 hectares (815 acres) of land had been sourced, allowing the government to build 316,000 flats, more than the goal.
But Chan admitted that only a third of the public housing units were expected to be completed in the first five years, from 2021 to 2026, while the remaining two-thirds would arrive in the second half of the 10-year window.
“The time frame and processes are challenging, and there might still be uncertainties” he said. “Government departments will not take the underlying challenges lightly … the government will explore means to expedite the development process and optimise the development potential of each and every housing site where practicable.”