Some of Hong Kong's poor finally feel at home in 290 sq ft modules

[Mista]

This looks like government control policy. In fact it's opposite. A real government control economy will not tolerate house price jumping that high. Singapore is an example. HK government's land policy is driven by market motivation.

Well, I mean both SG and HK are not entirely free market. The governments just have different motivations and priorities.

HK's housing looks like it's laissez-faire, but the government actually controls or influence the prices by limiting land supply. Eg; The government limits land supply during the financial crisis to support prices. If they are a true free market where prices are dictated by demand and supply, why does the government have to limit supply when demand fell? The HK government is actually intervening in the market but through market mechanism.

 

[Mista]

On the fundamental difference between HK and SG.

HK have always talked about emulating Singapore's public housing like every year, just look at SCMP lol.

But well, many years have passed, and talk is just talk.

There are vested interests in keeping prices high.

1) Many HKers have already geared into the expensive housing market, and a fall in prices will hurt them. Prices dropped significantly in the 1997 Asian Financial Crisis and many homeowners were in negative equity. Many declared bankrupt, and some even led to broken families and suicides. This is well-documented, and thus they are now wary of a possible significant decline in property prices.

Hong Kong‘s housing prices have increased significantly after the financial tsunami in 2008. Housing prices rose by about 50 percent in nominal terms from the end of 2008 to the end of 2010. Hong Kong people have perceived year 1997 as the pinnacle of the housing bubble period.

Because of the Asian Financial Crisis and misguided housing policy, the housing bubble bursted, and the extent of the price decline, some 66 percent from the peak to the trough in 2003, was both unprecedented and a big surprise (HKMA, 2001). Fluctuations in housing prices certainly have big effects on the real economy, as well as financial well-being of flat-owners and businesses.

Since the start of the significant decline of housing prices in 1997, Hong Kong‘s economy suffered from general price deflation and negative economic growth (HKMA, 2002). Not only did many corporations fail, but many home-owners also went under water and saw their homes going into negative-equity territory. Some owners even chose to commit suicide at that time. Therefore, it is important to maintain a stable growth in the housing market development.

https://commons.ln.edu.hk/cgi/viewcontent.cgi?article=1006&context=econ_etd

OTOH prices in Singapore were never that high, and due to a comprehensive public housing programme the public isn't that exposed to price fluctuations in the first place.

2) HK has low taxes and land sales alone make up around 23% of HK's government revenue, a very significant portion of revenue. This is excluding other property-related revenues like stamp duty.

OTOH in Singapore, in the early years LKY amended the constitution such that the government of the day cannot spend a single cent of revenue from land sales; the money goes straight into country's reserves for investment. The principle money can only be touched with the consent of an separately-elected President, also known as the 'two-key' mechanism. LKY saw what happened to many democracies in his time and he wanted to resist populist pressures.

33:58

If you want more welfare, you raise the tax. You can't raise revenue by issuing debt or jacking up land prices, and so the government doesn't really have an implied interest in seeing high property prices.

But if HK does what Singapore did, their revenue would immediately fall by >20% and their fiscal deficit would probably be >10% every year.

So in conclusion both the HK government and a large part of the society (homeowners) have vested interest in seeing high prices, or at least maintain at this level. From time to time, there will be talk about affordable housing but somehow the plans will get scaled down, delayed, or outright cancelled for some reason, like protecting the environment.

 

[ILC]

Mainland cities are no better.
Numbeo sucks, but I doubt it is very different from reality.

Property Prices Index 2024 Mid-Year

Property Investment Index. See comparison of indicators for residential property investment like apartment price to income ratio, price to rent ratio, gross rental yield, loan affrodability index, ...

www.numbeo.com

 

[Beast]

Well, I mean both SG and HK are not entirely free market. The governments just have different motivations and priorities.

HK's housing looks like it's laissez-faire, but the government actually controls or influence the prices by limiting land supply. Eg; The government limits land supply during the financial crisis to support prices. If they are a true free market where prices are dictated by demand and supply, why does the government have to limit supply when demand fell? The HK government is actually intervening in the market but through market mechanism.

I think u need to understand, hk is not like Singapore. Singapore despite being smaller than hk is blessed with plenty of flat land while HK is curses with plenty of high peak. 75% of hk land are not suitable for housing.

For example, the highest mountain peak in hk over 900m while in Singapore, the highest mountain is only 150m. You can imagine the amount of housing land for both countries.

 

[letsrock]

HK had a hyper capitalist system under British. British, who were building a welfare state for their own citizens in UK did not feel necessary to build similar safeguards for "after all" chinamen. So there was no minimum pays in HK or very low minimum pays etc. This did build immense wealth for corporates and also for government but left a rather dodgy lifestyle for average citizens in cramped houses.

I think HK government got addicted to being rich - it still runs budget surplus as opposed to most govts which run deficits because many care about poverty alleivation or living standard improvements.

In my opinion all asian states need to focus a bit on welfare. Maybe chinese guidance can help.

 

[Mista]

I think u need to understand, hk is not like Singapore. Singapore despite being smaller than hk is blessed with plenty of flat land while HK is curses with plenty of high peak. 75% of hk land are not suitable for housing.

For example, the highest mountain peak in hk over 900m while in Singapore, the highest mountain is only 150m. You can imagine the amount of housing land for both countries.

That's just a possible reason found to excuse the HK government really. There are so many unused flat land in HK if you look at the map or visit HK.

When there's a will there's a way. Unlike HK, Singapore is a fully-fledged city-state and we have to set aside land for national infrastructure/purposes. For example we have to set aside a significant portion of land for military camps/bases. There are 5 military airports in Singapore and the surrounding regions are restricted in height.

List of Singapore Armed Forces bases - Wikipedia

en.wikipedia.org

List of airports in Singapore - Wikipedia

en.wikipedia.org

We also spend a quarter of our budget on the military, which HK doesn't have to worry about. Imagine a tiny country spending more on the military than Indonesia, has more fighter jets than Spain, and has as many tanks as Italy. It's a heavy weight to carry. And yet, HK still has to depend on land sales revenue while Singapore can exclude land sales revenue as per the Constitution.

National infrastructure also includes water recycling/desalination, oil storage, rail depots etc. Many of such services in HK are shared with the mainland.

Then we also have a significant share of manufacturing in our economy (>20%) and these activities are almost always more land-intensive than the service industry. OTOH HK's manufacturing share is virtually non-existent (<1%).

In addition, there are also 20 gold courses in Singapore as compared to 6 in HK.

HK's issue is not really due to a lack of land, so as many other countries/cities with high property prices.

Does Australia, New Zealand and Canada lack land?

It's all about vested interest. Living in subdivided flats and even cages is an insult to the human dignity.

Btw Singapore even set and raised the average minimum flat size allowed by developers.

Why would Singapore do that if land size is such a constraint? Is land size really the root of high property prices?

 

[Mista]

I think u need to understand, hk is not like Singapore. Singapore despite being smaller than hk is blessed with plenty of flat land while HK is curses with plenty of high peak. 75% of hk land are not suitable for housing.

For example, the highest mountain peak in hk over 900m while in Singapore, the highest mountain is only 150m. You can imagine the amount of housing land for both countries.

That's just a possible reason found to excuse the HK government really. There are so many unused flat land in HK if you look at the map or visit HK.

When there's a will there's a way. Unlike HK, Singapore is a fully-fledged city-state and we have to set aside land for national infrastructure/purposes. For example we have to set aside a significant portion of land for military camps/bases. There are 5 military airports in Singapore and the surrounding regions are restricted in height.

List of Singapore Armed Forces bases - Wikipedia

en.wikipedia.org

List of airports in Singapore - Wikipedia

en.wikipedia.org

We also spend a quarter of our budget on the military, which HK doesn't have to worry about. Imagine a tiny country spending more on the military than Indonesia, has more fighter jets than Spain, and has as many tanks as Italy. It's a heavy weight to carry. And yet, HK still has to depend on land sales revenue while Singapore can exclude land sales revenue as per the Constitution.

National infrastructure also includes water recycling/desalination, oil storage, rail depots etc. Many of such services in HK are shared with the mainland.

Then we also have a significant share of manufacturing in our economy (>20%) and these activities are almost always more land-intensive than the service industry. OTOH HK's manufacturing share is virtually non-existent (<1%).

In addition, there are also 20 gold courses in Singapore as compared to 6 in HK.

HK's issue is not really due to a lack of land, so as many other countries/cities with high property prices.

View attachment 674720

Does Australia, New Zealand and Canada lack land?

It's all about vested interest. Living in subdivided flats and even cages is an insult to the human dignity.

Btw Singapore even set and raised the average minimum flat size allowed by developers.

View attachment 674721

Why would Singapore do that if land size is such a constraint? Is land size really the root of high property prices?