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2015 Policy Address by Chief Executive (4)
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IV. Housing, Land and Transport

Housing

61. Housing is the most critical of all livelihood issues in Hong Kong.  The current-term Government is not only determined to avert the supply-demand imbalance progressively, but is also confident and capable of achieving this.  The Long Term Housing Strategy released last month sets out the direction of Hong Kong's housing policy with a view to addressing housing problems with a multi-pronged approach.

Public Rental Housing

62. After taking office, the current-term Government has been vigorously speeding up the development of public housing, and public rental housing (PRH) production has seen continuous increase.  It is estimated that during the five years from 2014-15 to 2018-19, a total of 77 100 PRH units will be completed, among which 23 300 units are scheduled for completion in 2015-16.  In the Long Term Housing Strategy, we have maintained our PRH production target of about 20 000 units each year for the next decade.  To achieve this target, I have requested the relevant departments to keep co-ordinating the priorities, make proper planning and provide suitable community facilities so as to increase supply.  However, of crucial importance is the support of local communities and other people.

63. Meanwhile, the safety risks concerning subdivided flats, especially those in industrial buildings, should not be overlooked.  The Buildings Department (BD) will continue its efforts to totally ban the subdivided flats used for domestic purposes in industrial buildings.  It will step up prosecution against owners who fail to comply with relevant orders.  As to the subdivided flats in domestic and composite buildings, the BD will continue to take more vigorous enforcement actions against irregularities involving building and fire safety.  Should any occupants be rendered homeless as a result of these actions, the Government will provide them with transitional accommodation in accordance with the current mechanism.

Subsidised Home Ownership

64. High property prices decrease the public's relative ability to purchase a home and result in a marked increase in demand from low and middle-income families for Home Ownership Scheme (HOS) flats or other subsidised flats.  Greenview Villa, put up for pre-sale by the Hong Kong Housing Society (HKHS) at the end of 2012 and the first batch of 2 160 new HOS flats put up for pre-sale by the Housing Authority last month received an overwhelming public response.  We must therefore actively explore ways to increase the supply of sale flats through a multi-pronged approach by engaging public or non-profit-making organisations including the Housing Authority, HKHS, Urban Renewal Authority (URA) and the Hong Kong Settlers Housing Corporation Limited.  By so doing, more property choices and home ownership opportunities will be provided for low and middle-income families.

65. The Housing Authority will put up approximately 2 700 and 2 000 HOS flats for pre-sale in 2015-16 and 2016-17 respectively.

66. The HKHS will also offer 1 600 subsidised sale flats for pre-sale in 2016-17.  Of these flats, 1 000 will be units provided in Sha Tin at the Government's request made in 2013.  Moreover, two sites in Tseung Kwan O and Tuen Mun respectively have been set aside for development by the HKHS, providing an estimated total of about 600 units.

67. In addition to the Housing Authority's HOS flats and the subsidised sale flats of HKHS, I consider that there should be different forms of subsidised sale flats to meet the needs of different people.  To further improve the housing ladder, I have proposed to the Housing Authority that suitable flats should be identified among its PRH developments under construction for sale to Green Form applicants in the form of a pilot scheme, with prices set at a level lower than those of HOS flats.  Target buyers are mainly sitting PRH tenants and PRH applicants who have passed the detailed vetting and are due for flat allocation.  This scheme will help Green Form applicants achieve home ownership while releasing more PRH flats for allocation to families on the PRH waiting list.

68. In addition, in light of experience gained from Private Sector Participation Scheme and mixed development pilot schemes, I consider that we can vigorously explore ways to further leverage the private sector's capacity to assist in increasing and accelerating the supply of subsidised sale flats.

Private Housing

69. On private housing, according to the latest projection in December 2014, the housing supply from the first-hand private residential property market for the coming three to four years is approximately 74 000 units, which is the highest on record.  The private sector only produced an average of about 11 400 flats each year over the past five years.  Based on the preliminary assessment of private residential developments known to have started or to be started on disposed sites, the private sector will, on average, produce about 14 600 flats each year in the next five years, representing an increase of about 30%.  The Government will continue to maintain the stable and healthy development of the private property market through steady and sustained land supply and implementation of demand-side management measures when necessary.

Land

70. There is a serious mismatch between the supply of land and the needs of our society.  The short supply of land and housing has led to rising property prices and rents.

71. High property prices and rents have prevented many young people from forming a family or starting their own business.  This has also resulted in cramped living space for society as a whole and insufficient space for social welfare facilities such as kindergartens, elderly homes and residential care homes for persons with disabilities.  We have an ever longer PRH waiting list, and an increasing number of people have seen their living environment deteriorate.  Some have no alternative but to live in subdivided units in industrial buildings.  Small and medium-sized enterprises face greater operating difficulties while overseas investors are disheartened by the difficulty in establishing a business base in Hong Kong.  The root of many social and economic problems in Hong Kong lies in the shortage of land for development.

72. What Hong Kong lacks is not land, but land that is developable.  The difference lies in the need for land planning and development.  The process of land planning and development takes time.  Hong Kong experienced a long period of economic downturn and saw a declining property market after the Asian financial crisis.  The Government scaled back the speed and scope of our planning and development of land, and did not foresee the huge demand for developable land as a result of the eventual economic recovery.  A substantial amount of land was zoned for non-development uses such as country parks to improve the environment.  We also lowered the development intensity of land newly planned for development.  These are causes of the serious shortage of housing supply that we have been facing in recent years.

73. The consultation process for land planning and development has become drawn out with increasing controversies and uncertainties, including the uncertainties and time loss brought about by judicial reviews.

74. We have to take into consideration more and more factors such as the impact on traffic, environment, conservation and even air ventilation in the planning process.  As a result, the supply of developable land has decreased or decelerated.  Society as a whole must make hard choices.

75. Planning must reflect the overall interests of Hong Kong and heed the priorities of society's needs.  We should not only consider the well-being of individual areas in planning and development, but also the overall housing supply and demand of Hong Kong as a whole.  We cannot have our cake and eat it.  If we opt for a lower development intensity, traffic flow will be smoother and the living environment will be nicer.  However, the overall housing supply will be lower, which will lengthen the waiting time for PRH and push up property prices and rents.  Town planning and land supply should not cater only for the people who can afford expensive properties, but also for those facing difficulties finding a home due to inadequate supply.  At present, the most pressing concern is to ensure adequate and speedy land supply for development.  Increasing and expediting land supply is the fundamental solution to resolve the land and housing problems of Hong Kong.

Short and Medium Term Land Supply

76. In the past two years, the Development Bureau and relevant departments have stepped up their efforts to increase land supply and build up a land reserve by adopting a multi-pronged strategy and various short, medium and long-term measures.  This will help meet the public's housing and other needs.  We are pressing ahead with all the initiatives and the progress is as follows.

77. We have been carrying out land use reviews on an on-going basis.  Such reviews include examination of government sites which are vacant, held under short-term tenancy and for other short-term or government uses; Government, Institution or Community (GIC) sites; and the two stages of the Green Belt review.  I announced in my last Policy Address that some 150 sites had been identified.  We estimate that a considerable number of these sites will be available for residential use between 2014-15 and 2018-19 and are capable of providing over 210 000 residential units, of which over 70% will be public housing units.  This will only be possible if we can successfully complete the town planning procedures for rezoning and/or increasing development intensity, and press ahead with all the necessary works.  Relevant District Councils (DCs) have been consulted on the overall planning of these sites.  As at end-December 2014, amendments to the statutory plans of 45 sites had started.  Moreover, a few sizable sites which were not required for the intended uses have been converted for housing development or other uses that meet more pressing needs, with a view to achieving our housing target of 480 000 public and private residential units in the next decade.

78. To optimise land use, we will increase as appropriate development intensity.  Since the inauguration of the current-term Government, the Town Planning Board has approved applications to relax the development intensity of 26 housing sites, leading to an additional supply of about 3 500 units.  To tie in with the transformation of Kowloon East, we are reviewing the planning for the Kai Tak Development Area and the technical studies on the development intensity.  It is anticipated that the Kai Tak Development Area will provide no fewer than 6 800 additional units (including about 1 000 units already approved) and not fewer than 430 000 square metres of additional commercial floor area.

79. The development of the former Diamond Hill Squatter Areas (Tai Hom Village), the former Cha Kwo Ling Kaolin Mine and former Lamma Quarry are making good progress.  These three development projects are expected to provide over 8 000 public and private residential units.  The housing site in the Anderson Road Quarry will be made available for development as early as 2019-20 to provide over 9 000 public and private residential units.  In addition, the Government will commence the initial study on the land use of the Lam Tei Quarry and its adjoining area in 2015.

80. The Government is also actively considering making use of private developers' capacity to expedite the relevant developments.  We believe that private sector participation will help facilitate the development of tourism and commercial facilities.

81. The Government will relax outdated restrictions and streamline procedures to facilitate land development.  For example, in last year's Policy Address, I announced lifting the development moratorium on the area close to Wah Fu Estate for public housing development and the redevelopment of Wah Fu Estate to provide about 11 900 additional PRH units in total.

82. A Pilot Scheme for Arbitration on Land Premium has been launched to facilitate agreement on land premium for lease modification or land exchange applications, with a view to expediting land supply for housing and other uses.

83. Since its inauguration, the current-term Government has continued to increase private housing land supply.  It is estimated that the private housing land supply in 2014-15 is capable of providing more than 20 000 residential units, a record high since the Government introduced the private housing land supply target in 2010.

84. On land sales, from April 2012 to December 2014, the Government sold 73 private residential sites capable of providing about 25 400 units.  Most of the sites put up for sale were of small to medium size and the entry barrier to tendering was relatively low.  As a result, over 40 developers of different scales were awarded sites.  We see increasing competition among the developers in bidding land and selling flats.

85. Recently, the MTR Corporation Limited (MTRCL) completed the planning procedures for the property development project at the West Rail Yuen Long Station, which is capable of providing about 1 880 units.  The Government also encourages the MTRCL to launch its property development projects as soon as possible, and the MTRCL has responded positively.  Last year, the MTRCL successfully tendered three projects capable of providing about 6 100 units.  The MTRCL is embarking on tendering work for other projects.  The Government is taking forward the planning for residential development at the West Rail Kam Sheung Road Station and Pat Heung Maintenance Centre in Kam Tin South, which are expected to provide about 8 700 units.  The preliminary land use review of the adjoining areas has been completed and these areas are estimated to have the potential for providing approximately 25 000 additional units.  At the same time, we will continue to actively explore with the MTRCL and the Kowloon-Canton Railway Corporation the development potential of stations and related sites along the existing and future rail lines, such as Siu Ho Wan in Lantau.

(To be continued)

Ends/Wednesday, January 14, 2015
Issued at HKT 11:54

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