The issues mentioned before is about the office rents. Though office rents came down substantially from their peak, retail rents were much more resistant to downward pressure, as big landlords obstinately refused to give in to retailers’ demand for rent reduction, even after the onslaught of the deadly disease SARS. At the end of 2002, retail space in Causeway Bay was ranked the world’s third most expensive in terms of rent, according to Laing and Simmons’ annual Main Streets across the World Study. After 2000, Hong Kong was ranked the most expensive retail location in Asia, according to a survey of global retail rents. Mainly, high business and living costs have taken a toll on Hong Kong’s competitiveness in general and would stall economic recovery going forwards.
Since the scrapping of the controversial “ 85,000 flats a year” production target, government was seen to be under too much pressure, mainly from lobbying groups in the property industry, to show a clear determination how to go about setting its land and housing policies. It appeared to have the conviction of a need to bring down property and land prices so as to allow Hong Kong to regain its price competitiveness versus neighboring countries. However, the effect of the plan is being doubted as the chronic economy is becoming worse.
There is a common phenomenon which is middle class can’t afford buying their own flats is related to the previous paragraph. Most people think that middle class in society don’t need to worry about the housing. In fact, the price of house seems a big wall to them. For instance, a house which is 700 square feet in Kowloon district is cost among 700 million dollars. They are hard to save the first phase to buy the house and afford the monthly payment although they are not on the bottom of the society, ironically they have the less care and support from the government.
Land is scarce and precious, particularly so in densely populated Hong Kong. As Guardian of this valuable resource, government is presumed to have a duty to exercise caution in its disposal and distribution. Meanwhile, Hong Kong has suffered for a long time the dire consequences of a deliberate high land policy, which has benefited no one but government and the developer conglomerates.
To address the high cost problems in Hong Kong and the underlying land monopoly and property market structure distortion, one practical and direct method would be for government to employ a low land price policy through the release of abundant land supplies, with allocation primarily targeted at affordable housing and economic restructuring needs.
It is understandable that government no longer wants to be a developer of subsidized homes, but it cannot just walk away from this particular social group that used to rely on the home ownership scheme for their housing needs. All government has to do is to allocate land for this specific purpose and the rest could be carried out by the developers. In order to ensure affordability of such type of housing, a special clause limiting the sales price or rent could be written into the conditions of Sales.
Reference:
News article in the South China Morning Post of 18th June, 2005
Research Paper “Examining Competition in Land Market: An Application of Event Study to Land Auctions in Hong Kong” February 2001 By: Yuming Fu and Stephen Ching
“How Competition is the Private Residential Property Market?” July 1996 By: Consumer Council
“Competition Policy: The Key to Hong Kong’s Future Economic Success” November 1996 By: Consumer Council
www.webb-site.com/articles/noncompete.htm
Paper “A New Direction for Public Housing in Hong Kong” 10th July 2001 By: Citizens Party
by
jimmy_lee93 (student)
