Hong Kong’s John Lee faces stern test over $4.5b bid to ease housing shortage

HONG KONG – A flagship US$3.4 billion (S$4.5 billion) plan by Hong Kong to build temporary housing to ease a massive shortage is facing fierce criticism over its high cost and the absence of a longer-term solution in one of the world’s most unaffordable property markets.

The global financial hub has long struggled with sky-high housing prices, which have rocketed by 350 per cent in the past two decades and created one of the widest wealth gaps in the world, making accommodation a serious social problem that Beijing is keen to see the city’s leaders tackle.

Hong Kong Chief Executive John Lee, announcing his first major housing initiative in his policy address in 2022, promised to build 30,000 units of “light public housing” over five years, with the hope of cutting the waiting time for public housing to 4½ years from six years.

But critics have slammed the HK$26.4 billion (S$4.47 billion) price tag, noting that each unit costs about the same as permanent public housing, and say the scheme is merely a band-aid solution to a festering problem that could potentially feed discontent.

The backlash over the project is a major challenge for Mr Lee after Beijing identified unaffordable housing as a key factor behind discontent, especially among the city’s youth, that led to sometimes violent anti-government protests in 2019.

Further raising the stakes for Mr Lee, Chinese President Xi Jinping in 2022 called for a “better life, a bigger flat” for the city’s people, many of whom live in cramped subdivided flats and “cage” homes – wire mesh hutches stacked on top of one another, close to glistening office skyscrapers.

“Wherever the location is, there would be opposition voices,” said professor of urban studies Simon Yau of Hong Kong’s Lingnan University, noting the criticism over the proposed locations – some in faraway urban areas – for the homes.

“But with this price tag, the government is using taxpayers’ money to experiment.”

The authorities in January announced eight locations for the homes that would have a unit size of 140 sq ft to 330 sq ft to accommodate families of one to five people.

The temporary houses, prefabricated units built using modular construction methods, would be dismantled after around five years, when the time for occupying the sites expires.

Prof Yau said the scheme would do little to solve the housing shortage – a problem that has dragged on for more than two decades – because there are currently 200,000 people living in subdivided flats, and the homes are not permanent.

A 2020 government report showed that 1.65 million people, or 23.6 per cent of the total population of 7.5 million, were living in poverty. That compares with the city’s roughly 434,000 millionaires in 2021, according to a Citibank survey.

Hong Kong is notorious for its number of subdivided flats, estimated at 110,000 units at a median area of 124 sq ft, smaller than a parking space. Even though their condition is extremely poor, their floor rent is 70 per cent higher than overall floor rent in the city.

The government said the light public housing would help tenants of subdivided flats, as the rent would be HK$780 to HK$2,650 a month, significantly below the current median of HK$5,000 rent for subdivided flats.

“Many people said Hong Kong is an international city, but its living environment is not ideal,” Mr Eric Chan, the city’s No. 2 official, told reporters this week. “That’s why the government is taking this step.”

On Wednesday, the government scheme faced a grilling by lawmakers who, however, passed a HK$14.9 billion budget request for building the first batch of homes.

The lawmakers said the project at Kai Tak in Kowloon, the most controversial among the eight sites, would further pressure already burdened facilities and transport networks in the area.

“With 30,000 people added to the area, the community facilities are really insufficient,” said Ms Starry Lee, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong.

Some residents of Kai Tak said they would consider organising protests, which would pose a significant headache for the government, and seeking a judicial review. They said the scheme ran contrary to plans to build a second Central Business District in the area and could affect home prices.

“This is a matter of confidence in the government (planning),” said Mr Cheung King-fan, a district councillor of the Kai Tak area. “Is the government trying to achieve the task (of increasing public housing) at any cost of public money?“ REUTERS