3.1 Over the ten-year period from April 1986 to March 1996, the Government disposed of or provided a total of some 680 hectares of land for public and private housing. This is a very large amount indeed, given the size and geography of Hong Kong. It has helped the public sector to produce some 41 000 flats on average a year over the period, while a further 31 000 flats have been provided on average a year in the private sector. This translates into new production of some 200 flats a day. Few cities in the world can better such a record.
3.2 That there has been a consequential, real improvement in living conditions for most households in Hong Kong is beyond doubt. The number of inadequately housed families1 has declined from 30% of the total in 1986 to under 9% today. But we are in no position to be complacent. The average waiting time for public rental housing is now six and half years, and we have pledged to reduce it to less than five years by 2001. The aspirations of the community for better housing, more home ownership and higher quality associated infrastructure inevitably rise as the wealth of the community increases. Suitable sites for housing and opportunities for redevelopment become rarer. And we face supply constraints, not only in terms of land and supporting infrastructure, but also in terms of the capacity of the construction industry.
3.3 On top of this, over the past ten years, the demand for housing has increased more than expected. This is principally because of a reduction in average household size and an increase in net immigration. As Hong Kong becomes more affluent and expectations rise, more families will want to have their own homes, rather than sharing accommodation. Coupled with an ageing population, this will result in more elderly persons living on their own. At the same time, the number of persons entering Hong Kong from China to join their families will continue to grow for sometime to come.
3.4 We must respond to these challenges by planning ahead and by regularly monitoring future changes. We need a comprehensive approach to produce a sufficient supply of flats to meet demand. The first step must be to assess housing demand : that is, to produce a reasonable estimate of flat production requirements in the public and private sectors, and to update it regularly. We must then use all means open to us, including assisting redevelopment, providing new land and infrastructure, and increasing the density of development, where appropriate, to help to meet demand.
3.5 Housing demand is generated essentially from the formation of new households, from the rehousing of families displaced by public and private redevelopment schemes or by clearances, and from households seeking better standards of accommodation. Taking into account these factors, we project a requirement for about 80 000 new flats on average each year over the 11-year period from April 1995 to March 2006. Estimated flat requirements for this period are set out in the table below -
|
PERIOD |
AVERAGE ANNUAL FLAT REQUIREMENTS |
||
|
Public |
Private |
Total |
|
| 1995-96 to 2000-01 |
54 000 |
31 000 |
85 000 |
| 2001-02 to 2005-06 |
39 000 |
34 000 |
73 000 |
| Average |
47 000 |
33 000 |
80 000 |
3.6 The above projections have been made, using a computer model operated by the Government's Working Group on Housing Demand2 . They will require regular review and adjustment in the light of changing circumstances. For example, the estimated requirement for public housing, which is based upon the current income eligibility limits for allocation of a Home Ownership Scheme flat, will vary according to changes in the affordability of private housing. This in turn will be affected by changes in residential property prices, household income, borrowing costs and housing preferences. As another example, the projected decrease in the size of the public sector requirement over the period from April 2001 to March 2006 is largely a result of the scheduled completion of the HA's current redevelopment programme. Demand is also affected by population growth, changes in household size and economic conditions.
3.7 The Government will in future regularly update its projected flat requirement, by re-running the model operated by the Working Group on Housing Demand. In order to achieve the production of sufficient flats to meet the requirement indicated, both in the public and private sectors, we will need -
| (a) | to secure a steady and sufficient supply of land and supporting infrastructure; | |
| (b) | to process housing projects and related land transactions quickly and efficiently; | |
| (c) | to maximise the opportunities for redevelopment in the private and public sectors; and | |
| (d) | to take action, as necessary, to deal with constraints on the supply of labour. |
3.8 For the period from April 1995 to March 2001, sufficient land has been allocated or identified (based upon past trends for private sector production) to meet our announced production target of about 85 200 flats a year for both public and private housing3.
3.9 For the period from April 2001 to March 2006, we have assumed, for the purpose of land use planning, a requirement for 390 000 new housing flats, or 78 000 flats on average a year, as reflected in the projections in the Territorial Development Strategy Review (TDSR)4 . This represents a "safety margin" of about 25 000 flats, or 7% of the current forecast of housing demand for the period.
3.10 Subject to further detailed study, we estimate that the development of reserved sites on current town plans, and the redevelopment of existing sites in the public and private housing sectors will be able to generate some 180 000 flats, or about 36 000 flats on average a year. There is thus a requirement to generate an extra 210 000 flats, or 42 000 flats on average each year, during this period.
3.11 We propose to meet this requirement for additional capacity by -
| (a) | developing new strategic growth areas; | |
| (b) | rezoning existing land where infrastructural capacity and environmental considerations permit; and | |
| (c) | increasing the density of development in selected locations where there is spare infrastructural capacity. |
3.12 The TDSR has identified ten strategic growth areas which could provide about 165 000 flats, or 33 000 flats on average a year, over the period5. In order to achieve this level of capacity, it will be necessary to adopt a 'target-driven' approach. We are looking at ways to speed up the production and disposal of new land for housing, for example, by streamlining procedures or by entrusting land formation and related infrastructure works to the private sector.
3.13 We aim to provide the balance of the estimated flat requirement of 45 000 flats, or 9 000 flats on average a year, through rezoning or increasing density of development. We are looking therefore at opportunities, subject to an assessment of infrastructural capacity and environmental impact in a number of feasibility studies6,-
| (a) | to rezone land in selected locations, previously designated for industrial or unspecified community uses, which are surplus to requirements; | |
| (b) | to identify potential new development sites on the periphery of planned or developed urban areas to which new roads and infrastructure could be extended without undue difficulty; and | |
| (c) | to redevelop suitable old flatted factory estates of the HA. |
3.14 We are also examining the feasibility of increasing the density of development (i.e. the number of flats to be built)7 in -
| (a) | comprehensively designed new development areas where existing community services and infrastructural capacity permit; and | |
| (b) | individual residential sites which have spare capacity. |
3.15 In addition to providing additional capacity, we need to ensure that any procedural or other constraints on the production of flats are addressed effectively. We have established the Housing Project Action Team (HPAT), chaired by the Secretary for Housing, to help to resolve complex problems involving major housing projects (500 flats or more) . So far, it has helped to advance 56 projects, involving about 130 000 flats, in the public and private sectors. We have also established a Housing Development Section in the Buildings Department to help major housing projects to meet the requirements of the Buildings Ordinance more quickly.
3.16 We will maintain our efforts to speed up housing production. In particular, we will continue -
| (a) | to act efficiently and effectively, through HPAT, to remove bottlenecks in the production of new flats; | |
| (b) | to look at further ways to streamline and speed up the procedures for the approval of housing projects and related land transactions8 ; and | |
| (c) | to ensure that housing related infrastructure projects, such as water supply, sewerage and transport links, are funded and completed in good time. |
3.17 An estimated two-thirds of total private sector production over the past ten years has come from the redevelopment of existing sites or properties. The Government has long recognised the importance of private sector redevelopment, as a means of both satisfying housing demand and improving the urban environment. However, the Government also fully recognises that as fewer underdeveloped buildings or areas remain to be redeveloped and, owing largely to multiple ownership of land, the costs of acquiring properties and relocating tenants increase, the viability of private redevelopment projects becomes more difficult to establish. The Government accepts that we cannot rely upon the private sector alone to achieve urban renewal to the same extent as in the past.
3.18 Thus, following a review and public consultation exercise, the Government announced, in a policy statement on Urban Renewal published in June 1996, a package of measures to inject resources, especially land for rehousing, into the urban renewal process, and to realise more effectively the potential of urban renewal agencies involved. As a first step, the Land Development Corporation (LDC) will co-operate with the Housing Society to carry out urban renewal projects. The Housing Society will act as a rehousing agent using new sites to be granted for the purpose, thus leaving the LDC to concentrate on planning, site assembly and implementation. A dedicated urban renewal team in the Planning, Environment and Lands Branch has already begun to map out the details of these new arrangements to speed up urban renewal.
3.19 In the longer term, we will consider ways to encourage repair and renovation of existing buildings as an alternative to redevelopment. Over the next 10 years, the number of older buildings aged 40 years or more will increase at a rate of about 900 a year. The redevelopment of these buildings is unlikely to contribute significantly to the net supply of flats. At the same time, a recent survey has indicated that these buildings are likely to deteriorate more rapidly if not attended to now. We are thus taking steps to implement a new Building Safety Inspection Scheme to encourage the owners to carry out necessary repair and renovation works. In the longer term, we will also consider ways to promote new technology to produce more durable buildings.
3.20 In the public sector, a key element of the original LTHS was to redevelop older public rental estates in order to improve housing standards. A Comprehensive Redevelopment Programme was launched in 1988 and will largely be completed by 2001. We have pledged to complete the programme by 2005. To increase supply, we believe that both the HA and the Housing Society should continue to make every effort to utilise fully the permitted development density in both new and redeveloped estates, in particular through the design and layout of the blocks on individual sites.
3.21 The capacity of the construction industry to meet the demand for construction projects will depend very much upon the availability of adequate manpower resources. Our latest estimates indicate that, over the medium term, we do not expect a significant overall shortage of labour in the construction industry . However, there are some indications of potential shortages in specific trades. We will continue to monitor the situation and, if necessary, take early measures in consultation with the Construction Advisory Board and the Construction Industry Training Authority, as appropriate, to alleviate any specific constraint which may arise. We welcome suggestions as to what measures may be required to meet any shortage in both the short and longer term.
3.22 The first step is to assess the demand for housing. This involves the running and re-running of a computerised housing demand model, which will respond to changes in population, housing policy, economic conditions and other relevant factors.
3.23 The model operated by the Government's Working Group on Housing Demand currently indicates an average requirement of about 80 000 flats a year over the 11-year period from April 1995 to March 2006. We have already allocated or identified sufficient land to meet this requirement for the first part of this period (April 1995 to March 2001). For the second part (April 2001 to March 2006), we have assumed, in line with the TDSR, a requirement for 78 000 flats a year (which provides a safety margin of about 7%). To meet this requirement, we will need to pursue the early development of new strategic growth areas, and, where feasible, the rezoning of existing land. We will also need to increase, where possible, development density to make better use of existing housing sites.
3.24 In addition to new development, we will need to monitor carefully the extent and speed of redevelopment in the public and private sectors. We will also need to monitor and, where necessary, take measures to deal with supply constraints other than land, in particular the capacity of the construction industry.
1 An `inadequately housed family' is defined for this purpose as a family living in accomodation which is either made of temporary materials or not-self-contained i.e. without its own tapped water supply, toilet and kitchen facilities.
2 In July 1994, an inter-departmental Working Group on Housing Demand, chaired by the Principal Government Town Planner (Territorial) of the Planning Department, was commissioned to produce a model to allow an assessment of housing demand over the period from April 1995 to March 2006 to be made. In January 1997, the Working Group completed its Report, which contains estimated flat production requirements in the public and private sectors.
3 This figure is an average. The actual supply will vary from year to year, depending upon various factors. In the public sector, production is scheduled to increase substantially towards the end of the period.
4 The primary goal of the TDS Review is to establish a broad, long-term planning framework, which takes account of and attempts to strike a balance between various land use, transport and environmental factors. Within this framework the necessary land and infrastructure can be provided, having regard to resource availability, to enable Hong Kong to continue to grow as a regional and an international city and become a better place in which to live and work. The outcome of the review, which began in 1990, is the "Territorial Development Strategy Review 1996", broad proposals for which are presented in a "Consultative Digest" published in July 1996 for public consultation. In 1997, a "TDS Review Executive Report" will be published to set out a selected framework.
5 We expect to be able to start building construction work on the West Kowloon Reclamation in phases between 1996 and 2001. Work on the other areas such as Southeast Kowloon and Kai Tak, latter phases of Tung Chung and Tseung Kwan O may start between 2001 and 2004, subject to the completion of studies and statutory planning process.
6 Preparatory work is in hand. Subject to a smooth rezoning process, construction of about 17 500 flats could start between 1998 and 2001, while construction of the remaining flats could start around 2003-2005.
7 For example, we are looking at places like Tsuen Wan Bay Reclamation, Pak Shek Kok Reclamation and Sha Tin Area 56A. Preparatory work is in hand to commission feasibility studies. We expect building construction to begin between 2002 and 2003, subject to the resolution of any problems identified by the feasibility studies.
8 In October 1996, Lands Department issued a Practice Note setting out revised procedures designed to speed up the processing of applications for land exchanges and lease modifications.