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In response to media enquiries on issues arising from public discussions on the Long Term Housing Strategy (LTHS) consultation document, a spokesman for the Secretariat of the LTHS Steering Committee (SC) issued the following statement today (September 6):
According to the projection by the SC, the gross total housing demand will be 449 700 units for the next 10 years (thus a total housing supply target of 470 000 units). There are questions on whether investment demand has been taken into account in the projection. We wish to clarify that, to the extent that demand for units that will be held purely for investment purposes and not channelled back into the market as rental units or for sale, investment demand has been taken into account in the projection.
Most flats purchased for investment purposes will eventually be channelled back to the sales or rental market, thus helping to meet the physical demand. Therefore, simple inclusion of investment demand would inflate housing demand. It is also important to recognise that the distinction between physical housing demand and investment demand may be artificial: most genuine homebuyers would consider their properties to be the most important investment in their lifetime. It is thus difficult to define or measure precisely the investment demand.
That said, it is recognised that certain types of investment demand could affect the demand-supply balance in the local residential market, to the extent that some flats may be owner-occupied as second homes or left vacant and therefore not available for take-up by the local population. In view of this, the SC considers that adjustments should be made to the projection of housing demand. According to the results of the 2001 Population Census and the 2011 Population Census, the number of flats occupied by Hong Kong residents as second homes has not shown a notable change. As regards the number of non-local buyers not using or leasing their units, within the "miscellaneous" factor in the projection is an element to reflect, inter alia, the demand of non-local buyers who may take up flats but without channeling them back to the market by estimates based on statistics from the Inland Revenue Department and the Rating and Valuation Department.
On the question of whether the projection has taken into account households who are now renting private units but have aspirations of home ownership and whether the projected demand figure has been underestimated when compared with the projection in 1998, we wish to point out that the SC considers that every household in Hong Kong should be adequately housed, irrespective of whether they live in public or private housing, or in owned or rented accommodation.
For the purpose of projecting long term demand, housing demand is defined as the total number of new housing units required to be built if each and every household is to be accommodated in adequate housing over the long term. Accordingly, it is assumed that those who are already adequately housed currently will not generate new net demand for housing units, even though some households may move between different housing units within the existing housing stock. Therefore, for those who are already renting a flat in the private sector that is adequate, and may want to rent or buy another flat, unless there are net changes in the number of households (such as splitting of existing households), it would be regarded as movements between different housing units within the existing stock, and not regarded as generating a need for new housing units.
It should be noted that the projection methodology and results adopted by the SC should not be directly compared to those in the previous LTHS exercises. They each adopt different methodologies, bearing in mind the housing situations at the time. The SC considers that the current approach will best represent the circumstances we now face and should provide an objective basis on which to assess long term housing demand. The projection results, and thus the total housing supply target, represent the best estimate based on the latest available data and under a framework which is robust.
Regarding the question of whether the projection has taken into account the suppressed housing demand from households who cannot afford flat ownership given the currently high property prices, we wish to point out that, in the context of the LTHS, housing demand is defined as the total number of new housing units required to be built if each and every household is to be accommodated in adequate housing, regardless of whether the housing units are self-owned or rented. We have also conducted scenario analysis using an econometric model to take into account the change in household formation and thus the number of housing units needed under different economic and housing situations.
As to the suggestion that the number of Inadequately Housed Households (IHH) has been underestimated because only part of the sub-divided units (SDUs) are counted in the projection, we need to clarify that the SC has adopted the widest possible definition of IHH precisely in order to ensure that the figures used represent the best assessment of those living in such accommodation. As the objective of the projection on long term housing demand is to estimate the number of units required to satisfy the need for adequate accommodation in Hong Kong, those households who are currently inadequately housed are deemed to have a need for new housing units, either in public or private housing. As there is no widely accepted definition of "inadequately housed", for the purpose of the long term housing demand projection, the SC has made reference to a number of considerations in determining which households should be regarded as "inadequately housed".
The SC considers that households in public housing (i.e. PRH and subsidised sale flats), which have been built to satisfy the housing needs of the community, should be regarded as living in adequate housing. For households living in private housing, the SC considers that the following circumstances should be taken into account in determining whether households are "inadequately housed" for the purpose of the projection:
(a) if the housing unit is made up of temporary structures (e.g. huts, squatters and roof-top structures);
(b) if the unit is located in a non-residential building (e.g. commercial and industrial building);
(c) if the unit is shared with other households (e.g. those living in rooms, cubicles, bedspaces and cocklofts); and
(d) if the unit is subdivided.
Based on results of the 2011 Population Census and the Survey on SDUs in Hong Kong commissioned by the SC, for the purpose of long term housing demand projection, the estimated number of IHHs is 74 900, including those living in units made up of temporary structures, those living in non-residential buildings, those sharing the same unit with other households, and those living in units with observable physical partitions and in buildings aged 50 years or less. (For details, please refer to paragraphs 4.17 to 4.25 of the consultation document.)
The SC notes that depending on the actual living conditions, not all households sharing units with other households are necessarily inadequately housed. Given the wide range of standards of SDUs in the market, the actual living environment varies under different circumstances. However, since it is difficult to differentiate the actual living conditions of individual households among these two categories, after balancing different views, the SC is inclined to adopt a conservative approach and assume that all of these households have housing needs which are not fully satisfied. Accordingly, all of them have been included in the projection of long term housing demand.
Ends/Friday, September 6, 2013
Issued at HKT 16:12
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