Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Saturday, Jun 15, 2024

To mend broken housing ladder, open up HOS resale scheme to young people

To mend broken housing ladder, open up HOS resale scheme to young people

More starter homes and youth hostels are good ideas that take time. Why not also free up existing housing resources by opening up the ‘white form’ scheme for a start?
The youth housing problem has been a catalyst of Hong Kong’s deep-seated conflicts. As housing prices hit new highs over the past two decades, outpacing young people’s income growth, home ownership has become increasingly elusive.

At Hong Kong’s 25th anniversary celebrations, President Xi Jinping highlighted four difficulties faced by the city’s young people, namely studies, employment, entrepreneurship and home ownership, and called for more opportunities to be created for their development and accomplishment.

Although housing prices have corrected in recent months, with more drops to come, home ownership remains difficult for most young people in the least affordable housing market in the world.

In Chief Executive John Lee Ka-chiu’s policy address, the government promised to support young people’s housing needs by launching more “starter home” projects and expanding the youth hostel scheme. Youth housing problems used to be overlooked in society, resulting in a decline in social mobility in recent years.

We are glad to see the government paying more attention. If most young people never set foot on the housing ladder, they will be excluded from the fruit of Hong Kong’s economic development. The socio-economic disparity between homeowners and the rest will widen further, exacerbating the wealth gap and jeopardising social stability.

To calculate the income-to-cost ratio for university graduates aged 25-29 years buying 1 sq ft in a Type A unit (less than 430 sq ft) in the New Territories, where housing prices are relatively low, we obtained information from the population census. In 2016, the monthly income of the top 10 per cent was HK$37,000 (US$4,751).

Buying 1 sq ft needed only a quarter of this salary. Buying a flat required no more than nine years of income. That said, back in 2001 the price per sq ft only took up 8 per cent of the monthly salary of an elite graduate.

But for the rest, home-buying ability dropped severely. In 2016, the median monthly income of university graduates was HK$19,000. Almost half of this would be required to buy just 1 sq ft.

This left them with limited options in the private housing market; they could only turn to subsidised government flats under the Home Ownership Scheme (HOS). Yet in 2001, the average graduate would have spent just 15 per cent of the monthly income on 1 sq ft of home.

The picture got much worse for the bottom 10 per cent of university graduates. In 2016, when the average monthly pay was HK$11,000, 1 sq ft would eat up 80 per cent of this compared to just 25 per cent in 2001. For many graduates, the income level in 2016 had fallen behind by so much, they qualified for public rental housing.

Data backs this up. Official data shows the number of public rental applicants under 30 years doubled from 29,000 in 2011 to 58,000 in 2018, with more highly educated young people joining the queue. In 2018, 47 per cent of applicants under 30 years had tertiary education, from just 27 per cent in 2012.

The same pattern was reflected in the HOS. In 2017, 49 per cent of all applicants were aged below 30; in all, 57 per cent were single applicants. Yet only 14 per cent of those successful are aged below 30, and only 5 per cent of those successful are single applicants.

Sadly, as single applicants are allocated only a very limited number of units, the young and single stand a very small chance. Failing to find affordable housing, they often postpone plans to start a family and even dismiss the idea of marriage.

The unmarried can only apply for public rental housing as singles and this is also a long shot. Left undealt with, this vicious circle of youth housing challenges, late marriage and a low birth rate will leave a lasting demographic impact.

Studies show that property is the most common means of wealth accumulation. In Hong Kong, home ownership also defines social status. Research shows the probability of children from low-income families becoming low-income adults is double that of ordinary teenagers.

For those from families with no home ownership, the probability rose to six times that of ordinary teenagers. Home ownership has become definitive of upwards mobility.

While boosting the supply of public and subsidised housing is the obvious solution, sourcing land for construction takes time. Thus, we suggest the government fully capitalises on existing resources to mend the broken housing ladder.

The key lies in the HOS resale market scheme, known as the White Form Secondary Market Scheme, which allows eligible buyers to buy subsidised housing units on the resale market without paying a land premium, making it affordable for many first-time buyers.

But transactions in this highly restricted market are slow and difficult; the latest quota is just 4,500 flats.

We propose that the scheme opens fully to young people of middle to low income. This can alleviate the undesirable situation of highly educated young people waiting for public rental units. The government should also encourage private home ownership among the young through tax and down payment schemes.

Chief Executive Lee displayed pragmatism in his first policy address. We believe the government can help young people get on the housing ladder and reduce the wealth disparity so everyone can lead a contented life with decent accommodation in the long run.

Related Articles

Hong Kong News
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.