tim's experiment

With a group of friends the other night we were comparing our housing arrangements.  One of us who described his flat as “typically Hong Kong” has 700 square feet. These he shares with his wife, three kids, grandmother and domestic helper. People who are not familiar with the Hong Kong housing scene might wonder about the helper. Those who are familiar will know that in order to rent or buy a flat, even of this modest size, you need two incomes, so help is indispensible. She is required to live in your flat by the Immigration Department.

If you take the footbridge which leads from the Shatin wet market to the public housing estates northeast of it, you will see some public housing “units” which have rightly been left empty and unfinished because nobody would wish to live that close to the passing crowds. Each “unit” is about the size of my carport. They are supposed to accommodate a family of four. People in Lancashire provide larger spaces for their whippets.

And this is the great unmentioned feature of housing in Hong Kong which is missed out in international comparisons, or in learned ponderings on whether we have a bubble or not. Hong Kong does not provide most of its people with what would be considered elsewhere a reasonable amount of space. It then charges them astronomical sums for the rabbit hutches on offer. Living in a house is a privilege reserved for plutocrats and indigenous villagers.

When I was a kid my family lived in public housing. Strictly speaking it was not a council house — a point in which my mother took some pride — because we rented it from the Development Corporation which was then building Crawley. The difference was rather theoretical. It had, as the estate agents would put it, kitchen, bathroom, two receps and three bedrooms. I suppose altogether there were about 2,000 square feet, including the garden shed and the space which was always provided in those days for your coal. There were gardens at front and back. Looking at it on Google streetview now I see that some later occupant built a garage in the back garden. There is still plenty of room, There is also a car parking space in the front garden, and some enthusiastic Chief Executive candidate has built a large extension on what used to be the dining room. No doubt he had planning permission. A glance at estate agents’ websites in the same town suggests that houses like this can be had for about 150,000-200,000 Pounds, say something between 2 and 2.4 million Hong Kong dollars. It would perhaps be unfair to compare this with the “dream house wi private gdn” advertised in today’s Pravda, at an asking price of $72 million. Crawley is not in London. If you don’t mind the commute there is a house on offer in Taipo for $8.8 million. This is a bargain but there is no garden. A house in Saikung offering 2,100 squ feet and lots of garden (“could keep a horse”)  is going  for $25m.  Houses in my own estate were reported a few months ago to have reached a resistance level at $20 million, above which apparently the cut taken by the government and the legal profession goes up painfully. However it seems we now continue onward and upward and one seller is asking $24 million.  Compared with my former home in Crawley the house is slightly bigger but the garden much smaller.

The result of all this is that for most people in Hong Kong there is no realistic hope of living in a house. Living in a flat is beyond the means of many. Actually owning a home of any kind is a distant dream unless your daddy’s rich or your employer is a bank, a bandit or the government. People in their 30s are living with their parents because they have no other choice.

This is not an accident. Nor is it a result of Hong Kong’s shortage of space. It is a result of government policy. The government is hooked on high land prices, so it runs the land market in a way which keeps prices high. Contemplating the approach of the C.Y. Leung administration it seemed the one thing we could hope for was that he would change this. He’s worked in the business, he should know what the problem is. The solution is no secret. The government has, after all, lowered land prices before when it wished to. Land sales need to be conducted on a regular basis, instead of only putting a site on the market when a big developer asks for it. Sites for sale need to be smaller, so that some contestants from outside the charmed circle of the usual suspects can be involved. And the government needs to run a vigorous and effective public housing programme, involving both sales and rent. These are affordable measures which have worked before.

But there is no sign of them being attempted this time, at least so far. Instead the government is apparently planning to tackle a symptom while ignoring the disease. There will be some kind of “youth hostel” for people who no longer wish to live with their parents. This is an interesting idea, with a lot of potential problems attached to it. To start with, running a hostel for adults is not like running a boarding school. Will there be visitors? Will there be overnight visitors? Will there be a bar? Will there be a smoking room? Will there be a contraceptive vending machine? This idea could lead to a lot of arguments. The other question is who will run the hostels. I fear we shall see the appearance of a well-connected left-wing organisation designed to divert government money into politically-correct pockets, like the one which produced a garbage national education syllabus. The question of who actually gets to stay in the hostel will then become politically delicate.

And in the end, this is a panacea. What is required is a general move in the direction of lower prices and lower rents. This will involve treading on some toes. The government should start trampling. If it solves this problem all the other little foibles will be forgiven. And if not, not.