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Following is the speech by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, at the Annual Conference of the Hong Kong Institute of Surveyors (HKIS) this morning (September 15) :
President Lau, distinguished speakers and guests, members of HKIS, ladies and gentlemen:
First of all I would like to thank HKIS for inviting me to speak at the HKIS' Annual Conference 2012 today. It is a great pleasure to be here and to see so many familiar faces.
"Housing" and "Land" are two of the most important key words of Chief Executive C Y Leung's new Government. Indeed housing is at the top of the list of livelihood issues. Your conference theme today is particularly relevant to the Government's current efforts in seeking more land and releasing more of our precious land resources for housing and other essential community facilities.
In recent years, there has been growing public concern about rising property rents and prices, as more and more people have found it difficult to find suitable flats in the market at prices they feel they can afford. Just to illustrate the gravity of the situation, residential property prices have gone up by 16 per cent in the first eight months of this year. Housing prices and rents have both exceeded the 1997 peak levels. Such increases are supported by solid domestic demand (both end-user demand as well as investment demand) within an unusual low-interest rate environment (in effect negative real interest rate), but are out of line with the performance of the real economy.
The downside risks in the global economy are building up, implying also higher downside risks of a property market bubble. The latest US move on QE3 (third round of quantitative easing) has aggravated such risks, and the Financial Secretary has sounded the warning yesterday.
This acute housing market situation has posed a great challenge to the Government. Movements in the housing market affect not just the economic prospect of society, but also the affordability of many ordinary people in securing a stable home. To enhance social stability, the Government is keen to make housing more affordable and accessible by the community at large. Indeed, housing is at the forefront of the Chief Executive's policy agenda.
At present about half of our population lives in either public rental housing or subsidised home ownership of some form. As housing prices and rentals remain high, there is more to be done to meet housing needs and demands through public housing, while the Government continues to adopt a balanced approach to increase the supply of public housing on the one hand and maintain the stability of the private housing market on the other. Should the housing market fluctuate unduly, the Government has to step in.
We are fully aware of the tight housing supply-demand balance. The key rests with tackling the problem at source, that is, to increase land supply for both public and private housing. Over the last few weeks we have proactively rolled out some short to medium term measures on the supply side.
Let me begin with the housing vision and policy of the Government. As stated in the Chief Executive's election manifesto, the objective of our housing policy is to provide low-income families who cannot afford private rental accommodation with public rental housing (PRH); and to assist the middle class with long-term affordability and home ownership aspiration to buy their own homes, so as to enhance their upward mobility and deepen their sense of belonging.
As an economically affluent metropolis, Hong Kong should be able to provide better residential accommodation for its people. The sight of still many living under dismal conditions in subdivided units and cramped private tenements reminds us that we have a lot to do in realising our housing vision.
At the foundation of our housing ladder, we provide PRH for low-income families who cannot afford private rental accommodation. As many people are aware, the demand for PRH has been increasing over the years. At present, there are some 199 600 applications on the Waiting List (WL) queuing for PRH allocation. If we compare this figure with that of last year, there is a significant increase of over 28 per cent. The bulk of the increase comes from non-elderly singletons, by 39 per cent. Indeed some 47 per cent of the WL applicants (93 500) are from this category, of whom over half (53 per cent) are aged below 30. Among these young applicants, 41 per cent were students at the time of registration. So we are facing a new development in PRH demand.
The Government is committed to maintaining an Average Waiting Time (AWT) for general WL applicants for PRH at around three years. As at end June 2012, our AWT for general WL applicants stood at 2.7 years while that for elderly one-person applicants stood at 1.4 years. In view of the significant increase in the number of PRH applications, we are conducting a review on the overall demand for and supply of PRH, including the demand from non-elderly one-person applicants. The review will also look into the number of new PRH flats that need to be built. We will examine the way forward and our priorities in response to the increasing number of PRH applications, so as to provide assistance to those with the most pressing housing needs effectively.
According to the Housing Authority's Public Housing Construction Programme, there will be some 75 000 PRH flats built in the next five years from 2012-13 onwards, with an average annual production over this period of about 15 000 flats. This is not a fixed target and is kept under review. We recognise that there are strong public calls for a quick increase in the supply of PRH. In this light, we have endeavoured to explore various means to increase the land supply for PRH. We will also strive to relax plot ratios and building height restrictions without compromising the living environment, as well as critically review the redevelopment potential of aged PRH estates for the purpose of increasing the supply of PRH.
We look in particular for sites which are properly zoned, resumed, cleared and formed with adequate provision of infrastructure, so that construction can start quickly. We have to work hard to solicit the support of respective District Councils and the local communities to the increased development of PRH.
While the community at large demands an increased and quicker supply of PRH, when it comes to local district consultation on PRH developments, oftentimes the sympathy disappears. Instead there has been opposition for one reason or another. If we can develop a strong public consensus behind us, I am confident that we will be able to shorten the PRH production programme, which is our top priority.
Apart from addressing the basic housing needs of our low-income group, we also endeavour to respond to the aspirations of low and middle-income households for home ownership. The Home Ownership Scheme (HOS) is the second step in the housing ladder. The last-term Government announced the resumption of the HOS in October last year, and the preparatory work for production of the first batch of future HOS projects is now in full swing. It is our planning objective to provide some 17 000 HOS flats over the four years from 2016-17 onwards. When more sites are identified in future, our target is to provide some 5 000 flats on average per year. Again this is not a rigid target. We will closely monitor the market situation and the public demand so as to adjust the number of flats to be rolled out to meet the prevailing needs. The Government will continue to work hard to identify suitable land to ensure a sustainable HOS programme.
HOS flats with premium not yet paid on the HOS Secondary Market remain one of the affordable housing choices for many low and middle-income households. Up to now only PRH tenants (the so-called Green Form applicants) are eligible for buying these flats. In view of the public's demand and the fact that the first batch of future HOS flats is expected to be completed in 2016-17, the Chief Executive earlier announced that we will allow 5 000 White Form (WF) applicants each year to purchase second-hand HOS flats with premium not yet paid on the Secondary Market. We believe that this interim scheme will facilitate the turnover of HOS flats and revitalise the HOS Secondary Market.
I am aware that some concerns have been expressed in the community on speculative activities on the HOS Secondary Market that might result from the extension of the Secondary Market Scheme to cover WF buyers - i.e. those non-PRH tenants meeting income and asset limit requirements. Of course, the annual quota of 5 000 WF applicants is not a large number against a total of about 380 000 flats (including about 250 000 HOS flats, 120 000 Tenants Purchase Scheme flats and 9 000 Flat-for-Sale Scheme flats of the Housing Society) with premium not yet paid on the Secondary Market. In addition, there will be resale restriction to WF buyers under which they are not allowed to sell their flats with premium not yet paid on the HOS secondary market in the first two years after they have purchased the flats. I believe that this measure, together with the Special Stamp Duty (SSD), which was introduced in November 2010, will be effective in curbing short term property speculation.
As many of you are aware, the previous Administration developed another scheme of assisted home ownership known as My Home Purchase Plan (MHPP). This was originally intended to be a "rent-to-buy" scheme when first introduced in October 2010. Last year, a "buy upfront" option was added to the scheme. In light of the strong public demand for units to be made available for sale, the New Government has decided to release the first of the MHPP projects being built by the Hong Kong Housing Society at Tsing Luk Street for immediate sale. This will help increase the short-term supply of subsidised sale flats.
Apart from the Tsing Luk Street project, there are a few other sites which have previously been earmarked for MHPP, and could provide in total some 4 000 flats. We are exploring how best to make use of these sites to provide more subsidised sale flats to respond to the public's aspiration for home ownership. In revisiting MHPP, we have also commenced a study on a new scheme with relatively longer-term sustainability to address the home ownership aspirations of the original target group of MHPP. When details are ready we will share them with the community.
Let me now turn to the private property market. As I said earlier, we have been monitoring the increase in property prices, particularly for small and medium-sized flats. In order to help stabilise the private property market, the Chief Executive, on August 30, announced ten measures in total to increase the supply of both public and private units. The Lands Department will also expedite the approval of the pre-sale consent for new private housing. We expect that there will be a supply of some 65 000 private first-hand flats to the market over the next three to four years.
In addition to these relatively short-term measures, we are going to earmark sites for the provision of additional HOS flats in Kai Tak. We will try to bring forward the completion of some 2 300 PRH flats in Cheung Sha Wan by two years and rezone 36 parcels of "Government, Institution or Community" (G/IC) sites which currently do not have any specific development plans, for residential development. By using these G/IC sites for residential uses, it is expected that an additional 11 900 residential flats can be provided.
Furthermore, the Government will be streamlining the process of converting industrial buildings into specified residential use, so as to help increase housing supply for different sectors.
It is the Government's working target to make available land for construction of an average of 20 000 private residential flats each year in the coming years. The Government is also looking into the possibility of using caverns to relocate existing public facilities thus to release the original sites for long-term housing development. We would also explore if some degraded rural land in North District and Yuen Long, which is currently used for industrial purposes or temporary storage, or which is deserted, and can be turned into housing land to contribute to the medium and long term housing supply. These efforts are in addition to plans to launch New Development Areas, such as the Northeast New Territories development plan, which is akin to the construction of New Towns in the 1970s and 1980s. The Government aims to build up a sufficiently large land reserve to stabilise the supply of residential land, and to allow us to respond to changes in the market which will inevitably happen from time to time. We want to avoid the boom and bust scenarios that have characterised the housing market in the past.
The Chief Executive has also lately announced a pilot scheme in Kai Tak for the implementation of his election pledge on the "Hong Kong Properties for Hong Kong Residents" policy. The purpose is to reassure Hong Kong permanent residents, numbering 6.2 million, that their home purchase opportunities will not be jeopardised by the influx of non-local property buyers and investors, especially from the Mainland.
The new policy measure will apply to selected sites through appropriate land lease conditions, and will not result in barring mainlanders and foreigners from property purchase across the board. Hong Kong remains to be an open market economy. There are those who worry that this new policy might affect Hong Kong's free economy status. We think such worry is perhaps unnecessary. Unlike other goods and services, land supply is finite. Countries like Singapore and Australia, which rank high on the Heritage Foundation's free market league table, right after Hong Kong, have tougher rules against foreign land and property buyers and investors. The new policy, in our view, has struck the right balance between maintaining an open market and safeguarding our permanent residents' opportunity in property purchase.
Finally, complementing the above efforts, and to take forward the New Government's housing vision and policy, we have just launched the Long Term Housing Strategy (LTHS) review, to assess and comprehend the evolving demand profiles of different sectors including the elderly, young families and singletons, as well as the inadequately housed. I will personally chair a Steering Committee which will conduct the review and tender advice and recommendations to the Government on the way forward. Supporting the Steering Committee is an inter-departmental Working Group chaired by the Permanent Secretary for Transport and Housing (Housing).
The Working Group held a preliminary meeting on September 5 while the Steering Committee will commence its work next month. We anticipate that the work report will be published in the second half of next year for public consultation.
So you can see that the new Government has been proactive and determined in its efforts to address the range of housing and land issues. As the former US President John F Kennedy once said, "We must face up to problems which do not lend themselves to easy or quick or permanent solutions". Of course, we will continue to face many challenges, and we have to listen broadly and to engage the community widely in order to forge a strong consensus to support our vigorous "Housing Campaign".
I look forward to ideas and suggestions from the discussions in today's conference which can provide useful insight to our understanding of the land development and supply situation. You have a powerful audience today given the presence of so many esteemed speakers and professional experts. May I wish you all a fruitful day and may we gain from the wisdom coming from your discussions.
Thank you very much.
Ends/Saturday, September 15, 2012
Issued at HKT 17:57
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