Rising Demand and Housing Costs in Hong Kong

Chapter One

1.1 Introduction

The 21st century has been marked with a high growth in human population which has led to the increased demand for housing. Housing refers to the physical structures people construct for provision of shelter. It is human right, which sadly, most residents of Hong Kong struggle to afford. Today, Hong Kong is recognized as the most expensive place to acquire a house in the world. Notably, the Hong Kong is also densely populated as per the findings of the Census and Statistics Department (2018), where a population of 7.4 million was recorded for Hong Kong. According to Lam (2016), the housing prices in Hong Kong have soared unprecedentedly over the past decade. In the year 2012, the average price of residential property increased by about 24% which contributed to making Hong Kong’s housing market the second overvalued in the world, after Singapore. The government of Hong Kong has been adopting different measures to deal with the housing crisis in both the private and public sectors. Typical examples of government measures for the public sector are the Home Ownership Scheme and the Public Housing Program. The Public Housing Program was introduced back in 1954 following a fire accident in the Shek Kip Mei squatter settlements which saw up to 50,000 residents lose their homes (Deng, Chan and Poon, 2016).

The government of Hong Kong was forced to construct practical and simple multi-storey buildings that were affordable for the victims. To date, the Public Housing Program is still in operation and it is aimed at provision of rental houses that are affordable to the families whose incomes are low and further ensuring effective and reasonable utilization of public resources. The Home Ownership Scheme which was established in 1976 was intended to provide alternative choices for middle-income families whose incomes were insufficient private housing while also providing an opportunity to public housing tenants with high incomes to give up their units for other needy persons and acquire their own flats (Lau and Murie, 2017). The government of Hong Kong also introduced an extra flat 15% stamp duty tax to the private housing market in 2016 which was aimed at discouraging the rich individuals from raising housing prices through property investments and as such cooling down the property market. Public Rental Housing (PRH); a provision by the Hong Kong Housing Authority is the chief source of subsidized residence for the poor class in Hong Kong. More than 722 000 subdivided Public Rental Housing units were in existence by the year 2013, and in the same year, more than thirty percent of the entire Hong Kong population occupied in Public Rental Housing Units (Agus, Doling, and Lee, 2002). Public Rental Housing intended to provide ground for nurturing private property ad high land in Hong Kong for the benefits of the low-income earners representing the larger population in Hong Kong. Based on the fact that the low-income earners were the target, sales prices were tamed. Considerably, the private property was left to the higher income class with a relatively higher selling price. Under high land price policy, the Hong Kong government received substantial revenue collected from land sales which accounted for approximately 40% of her revenue income. As the private property price increased, the low-income class developed difficulties owning a house. Consequently; low-class income earners had to search for alternative Public Rental Housing Units provided by the government.

The government is the only land supplier and most prominent land developer for both the private and public sectors. The tragedy of housing in Hong Kong necessitated for a framework to address it for the essence of sustainability, and sustainable development Chu (2013). The government got connected and concerned to the tragedy and initiated statutory frameworks; especially the Long Term Housing Strategy which was deemed one of the most comprehensive; which was released in the year1987. The framework provided a target of 960,000 housing units to be constructed to satisfy the increasing demand for housing facilities by the year 2001. This literature perceives such effort as sustainable in tackling the housing challenge in a more informed, systematic and gradual process especially in the dispensation which the available land was not suitable in both medium and long term perspectives. According to Yang, and Yang, (2009), the Long Term Housing Strategy could not sort out the issue of the demand-supply gap. To them, the framework only dragged and lagged behind the cyclical pattern of the property markets, but magnified market volatility. Adams and Tiesdell, (2012) present land as a significant Hong Kong resource, but yet limited in supply. Overcrowding and a congested human environment constitute substantial issues since the advent of urbanization. Hong Kong is situated at the South Eastern end of China; an ideal position for Asia’s economic activity. This strategic position according to Chu (2013), has contributed to the demographic blossoming of the city. Besides, Chung, (2014) notes that land value maximization and land usage maximization seemingly constitutes the fundamental principles governing the development of Hong Kong. However, even with such efforts by the government, the city is still considered as the most expensive place to own a house and by the end of September, 2018, there were still 150,200 general applications for public housing that had an average waiting time of 5.5 years.

It is quite unfortunate that there are not adequate studies on the solutions for the housing crisis in Hong Kong. This study, is aimed at identifying the causes of the ever rising property prices and consequently doing an assessment of the strengths and limitations of different proposed solutions to Hong Kong`s housing problem. That was done through conducting interviews with private and public stakeholders to shed light on the rationales behind the contrasting solutions and factors that brought about the housing crisis.

1.2 Research question

What are the causes of the housing crisis in Hong Kong?

What is the perception of the members of public about the housing situation in Hong Kong?

What are possible solutions for the housing crisis?

1.3 Research Objectives

1. Survey and analyse the perception of the public about the housing situation in the city.

2. Develop a deep understanding of the causes of the housing crisis in Hong Kong and its possible solutions.

1.4 Theoretical Framework

It is universally accepted that housing is one of fundamental elements in human living. Defining a house is not very easy. A house may include open spaces that are enclosed or may be made up of only rooms. The housing concept encompasses more than just a house. Housing is basically a product that whose nature is highly complex. Housing is both a social and economic process that plays a role that is tremendous in influencing countries’ economies. It is a rather complex commodity. Up to a quarter of human personal consumption goes housing expenditure. Purchasing a house is quite extensive to the extent that it is the single largest expenditure of many household`s lifetime. In most low income families, housing monthly incomes are biggest items in budgets after food. The wellbeing of societies usually is at stake because there exists a close relationship between the amount and character of the supply of housing. It is worth noting that housing is not only sold but is also rented. In contrast to the need for clothing and food, the purchasing of new housing is post-ponable. It is not used up and discarded. Rather, as it ages and becomes less desirable, it is passed to lower income users. However, not all dwellings appeal deteriorates with age and aging houses prices do not always decline. The most important thing about housing is that it has social implications that are highly significant based on the fact that it provides shelter for families which are the basic units in human life. Homes are a major factor in human environments whether they are measured in terms of space, time and the importance of functions carried on there.

Chapter Two: Literature Review

2.0 Introduction

This section contains a review of literature within the domain of the housing crisis in Hong Kong. Gaining an understanding of the causes of the housing crisis is necessary if sound solutions are to be provided. With such information the government and people in charge of planning the city of Hong Kong would be in a better position to deal with the housing crisis and as such improve the lives of the low-income earners who are the most affected by the crisis.

2.1 Hong Kong’s Housing Crisis

Home prices in the city of Hong Kong have since 2003 soared 430 per cent, something that has made the city to be the most expensive place in the world to purchase a house out of the more than 460 urban centres in the world today. According to Zheng et al (2018), in Hong Kong, in 2017, the median price for a typical flat was HK 5.42 million which was equivalent to US$692,700. That was at least 74% higher in comparison to similar flats in New York`s uptown, 18 per cent higher than the price of similar apartments in London and 148 per cent than the price of similar flats in Tokyo. Hong Kong is well known for her centralized position as an economic hub for trade in the Asian continent, and also as one of the world’s most populous city. The study of Hong Kong`s housing predicament is instrumental as it provides a basis for permanent solutions to the overlying challenges. Hong Kong’s shortage of affordable housing facilities has regularly induced pressure with more than 30% of the population dwelling in subsidized housing and many more seeking to enrol in the public housing program. The competitiveness of government programs makes residents opt for divided units, rooftops settlement or cage homes. The incremental rent pressure, undesirable living conditions, and inflation have contributed to making people homeless (Yoshino, and Helble, 2016).

According to Gurran, Gallent and Chiu (2016), ownership of homes is a mirage for most residents of Hong Kong. The 2018 H1 Hong Kong Real Estate Market Outlook survey found the situation to be too dire that up-to one third of the rental class were considering leaving the city entirely. The city is by far the most expensive place on Earth to own a house. Today, it requires 19.4 times the typical salary of a resident of the city to purchase a home there. Over the years, homes have turned into commodities and trading in and out of the market has developed into a prime way of making money. There are several factors that have converged to drive up the housing prices in Hong Kong. The city which is small and densely packed has its interest rates pegged on the interest rates of the US which have remained artificially low even at periods of ample liquidity. Further, Hong Kong has also always remained to be an open market which is always susceptible to “hot money” inflows in search of homes. Chan and So (2016), posit that the city has also attracted buyers drawn from mainland China who seek safe places for their capital. It is worth noting that the city has also been suffering from the aftereffects of the decision by the government to stall auctions of land in response to the bubble that burst following the 1997 Asian Financial Crisis. All land there is owned by the government and is only released on long leases with no propensity being shown of easing property prices. According to Wu, Cheng and Wong (2017), up to one-third of the revenues of the government are drawn from land sales, which technically are land leases and the stamp duties on the transactions of properties. That puts Hong Kong in a good position to maintain its income taxes low, with 17 per cent being the maximal rate. Because the government makes its revenues through drip-feeding plots that are highly prices, high property prices are guaranteed, more than half of the residents of Hong Kong live in small government rental houses that are cheap and shoddy. High land costs in Hong Kong have been attributed to be a major cause of the exorbitant housing prices. According to Wetzsten (2017), land costs make up to 70 per cent of total project costs in the extreme cases, and that is more than double the 30 per cent range that is common in other urban places. Following the Asian Financial Crisis, prices were observed to sink by almost 70 per cent and it was only in 2003 that the prices recovered. Since then, the prices have steadily risen more than 400 per cent. To prevent speculation in the market, the government has imposed restrictions that are tough on quick sales and that has largely been successful. End-user demand has however, not been dampened by tight rules on mortgage lending. Instead, the tight rules have chilled the market, which has led less transactions something that has made it very hard for first-time buyers to easily access properties in the resale market.

2.2 Insufficient Land Supply in Hong Kong

Hong Kong has for a long time now been plagued with land shortage. Huang, Shen and Zheng (2015), posit that the society suffers from problems that are multi-faceted that include living conditions that are cramped, tiny and pricy which are characterized by soaring rents and property prices and difficulties in purchasing homes, high operating costs for businesses and community facilities that are not adequate. According to Solomon (2018), the topography of the city is mountainous with 270 km2 (24.3%) of the total land area of 1,111 km2 being built up area. The remaining 841 km2 (75.7%)is not for development land that is made up largely of fishponds, reservoirs, wetlands and country parks. 6.9 per cent of the built up are is utilized for housing, 5.9 percent for infrastructural facilities, 2.7 per cent for economic land, with both government and community facilities and open spaces taking up 2.3 per cent each. Hong Kong has over the years undergone shifts that are major in economic and social structures and development and planning have continued to be challenging. However, even with the demographic changes, the land supply of Hong Kong has failed to keep up with the population growth, number of households and the sustained social and economic development (La Grange, and Pretorius, 2016). While since the 1970s the build-up of land has been steadily rising in a bid to cater for the rising population’s needs and the continued growth in the economy, development of land since the turn of the millennium has slowed in response to the 1997 Asian Financial Crisis and the economic downturn that followed the crisis. As a result of that, the increase in housing flat supply, developable land and space for economic activities has been lagging behind the continued growth in households and population. Gurran and Bramley (2017) argue that the development of land failed to keep pace with the economic recovery that followed the financial crisis. According to Zhang (2017), the shortage of supply of land has led to numerous livelihood problems that have had a direct impact on citizen’s daily life. In housing, the insufficient supply of land contributed to the shortage of housing land which has continuously contributed to the drop in house completion both for private and public houses.

2.3 Position of Hong Kong’s Government in Housing Crises

It is under the jurisdiction of the Chinese government to provide public rental housing for families unable to raise private rental accommodation. Demgenski (2015) traces back the 2008 statistics and submits that over 2 million people accommodated public rental housing which was under the management of Hong Kong Housing Society. Towards the end of the same year, the public rental housing stock constituted about 753 500 flats. Ault, Jackson, and Saba, (1994) note in their studies that since the year 1978, above 458 100 houses have been sold to families at discounts; under government-subsidized schemes such as the Home Ownership Scheme, Tenants Purchase Schemes, and Private Sector Participation Scheme; which all operate under the auspices of the Hong Kong Housing Authority. In the pursuit to support the government housing policies, the Honk Kong Housing Authority opted to dismantle the operations of Private Sector Participation Scheme; prohibited the construction and sale of Home Ownership Scheme in the year 2003 and stopped the Tenants Purchase Scheme in 2005 (Dwan, Wong, and Sawicki, 2013). The problem of housing in Hong Kong is largely embedded along the demand-supply forces, and can also be resolved along these lines. The high demands coupled with high population shifts the prices higher, making only a few people afford them (Yoshino, and Helble, 2016). This consequently makes people look settling in the poorly developed and subdivided structures. There is a need for the government to search for private developers in the provision of subsidized buildings to meet the critical demands of the people. Alongside providing incentives to private developers to build new houses, the government should also consider energizing optimal utilization of underutilized structures in the city, to provide space for the homeless population. This can also contribute to the reductions in housing price in Hong Kong (Lau, Lai, and Ho, 2018).

2.4 Subdivided Housing Issues of Hong Kong

Based on contemporary literature, the majority of Hong Kong’s citizens are presently prone to worse housing conditions. There is an elemental subdivision of housing units to meet the demographic demands of the people. To make the subdivision legally bound, the property owners ought to remain with the bounds of the Hong Kong Building Ordinance by hiring certified professionals to perpetuate basic constructional requirements. Such renovations are done morally wrong; and violate the building codes and indeed jeopardizing the tenants’ safety (Chiu, 2007) Some of the tiny sub-divided homes accommodate some of the city’s most impoverished families. The units are typically less than two square meters in the flow area and are so tiny that tenants are packed n top of one another (Gottlieb and Hang, 2011). These small cubicles are locally known as “coffin homes” and are a demonstration of a huge discrepancy in terms of income distribution between the wealthy elites and the lower income earners. Notably, Wong, Liu, and Siu, (1991), cognizes that the perpetration of subdivisions is founded on building code violations. The removal of the authentic partition wall to integrate more rooms for more new tenants to occupy is founded on greed and egocentrism. The newly added walls in many cases are not as robust as the original ones which therefore compromises not only the safety of the tenants but also the integrity of the buildings and building codes. Empirical studying of Hong Kong’s housing crisis concerning causes and solutions is not a so much ventured area; which therefore ignited this research to discover what is transpired, before and now. This literature remains optimistic that with urbanization, and as new cities develop; Hong Kong can get deflated off her huge population. The focusing on current housing policies and the existence of clearly defining building codes and framework may excite one into thinking about what and why the buildings throughout historical contexts are killing tenants. It is for such perspectives this research is founded. By looking into the conditions of impacts of buildings having subdivided units this review has given insights on the predicaments surrounding the housing sector.

Chapter Three: Research Methodology

3.1 Introduction

This chapter sheds light on the design of the research, the methods that were used to collect data, the location of the study, the population that was targeted and the data presentation and analysis techniques that were used in the study and finally the ethical considerations. For purposes of legitimizing the study, a properly written introductory statement was obtained from our schools department. The contents of the introductory statement included a clearly stated purpose of the study.

3.2 Research Method

The focus of this study is to come up with solutions for Hong Kong`s housing crisis using qualitative research methods to do so. According to Taylor, Bogdan and DeVault (2015), qualitative research methods are both humanistic and interactive and are largely based on communication. They are research methods whose focus is obtaining data through conversational and open-ended communication. It is worth noting that this method is not just about how people think but also the reasons behind their thinking. The aims of qualitative research methods tend to vary with different disciplinary backgrounds

3.3 Research Design

The research design entails the overall plan of how the research was carried out and what was done to answer the proposed research questions. A descriptive survey research design was used for this study. The descriptive survey research design describes behaviours through gathering the perceptions, attitudes, beliefs and opinions of individuals about an issue (Bulmer, 2017). Such descriptions are then summarized by making reports of the percentages or numbers of people who report different responses.

3.4 Data collection methods

One-on-one interviews will be carried out in this study. One-on-one interviews are personal interviews that usually are carried out with one respondent at a time. Interviews are purely conversational methods and present a good opportunity for gathering in depth details from respondents (Wiens, 2017). This method provides a good opportunity for gathering data that is precise on people`s believes and their motivations. With proper experience, a researcher can come up with proper questions that would help them collect data that is meaningful. One advantage with this method is that in the event the researcher needs more information, they can always ask follow up questions (Silverman, 2016). The interviews in this study were conducted both through phones and also face-to-face and lasted between one to two hours.

3.5 Sampling

The participants in the interviews were selected through purposive and simple random sampling. Purposive sampling is a non-probability sampling that is selected based on a population's characteristics and a study’s objectives (Etikan, Musa, and Alkassim, 2016). Purposive sampling helped identify policy makers, like members of the city council and members from the Task Force on Land Supply team. Once selected, respondents were also being requested to recommend other policy makers that would be useful to the study Simple random sampling was used to pick real estate agents.

3.6 Data analysis and presentation

When analysing qualitative data, the researcher must seek meaning from all the available data (Stuckey, 2015). Such data may be categorized and further sorted in patterns as the primary basis for organizing and reporting the findings of a study. The obtained data is streamlined to definite patterns and themes, or systemic issues or representations of theories or approaches. The data that was obtained in this study was coded and fed to computers. Subsequently, the data was subjected to analysis statistically using Microsoft Excel. Tables and charts were used to represent the results of the analysis. To summarize raw data, descriptive statistics in the form of percentages were used.

3.7 Ethical considerations

Before the onset of every interview, the researcher had to obtain proper consent from the interviewee. As a sign of respect to privacy, the researcher additionally avoided asking hypersensitive questions in the course of the interviews. Additionally, the researcher was careful with the selection of questions to ensure continued respect of the cultural norms of the community of interest. In line with this difficult and taboo topics were avoided. Data collected must always remain confidential and protected from third party access. The interviewees were assured that their responses would remain confidential. The information collected from the interview was also reported accurately and honestly, verbatim, without identifying the interviewees by their names. The interviewees were assured of their anonymity to improve their confidence of participating in the study and further to assure them that the information would not be used against them.

Chapter Four: Results and Discussion

4.1 Introduction

The purpose of this study was to identify the causes of the housing crisis in Hong Kong and further come up with solutions for the problem. To achieve the goal, the following research objectives were formulated and as a guide to the study.

1. Survey and analyse the perception of the public about the housing situation in the city.

2. Develop a deep understanding of the causes of the housing crisis in Hong Kong and its possible solutions.

So as to guide the attainment of the above objectives, interviews were designed and were conducted face to face. The study`s findings were then presented, interpreted and discussed as follows; From the residents who were involved in the interviews it was observed that most of them resided in traditional subdivided units (29). It is worth noting that all the resident interviewees in this study lived in some form of subdivided unit that is either a coffin home stacked flat, bed space or coffin home. The graph below is a representation of the distribution of the types of living accommodations of the interviewees.

To develop a further understanding of the extent of the housing crisis, those interviewees who said that they lived in traditional sub divisional flats were asked about the number of flats in their overall subdivided sections. From their responses, it was evident that almost 80% of the homes were made up of between one and ten subdivided units. There are even individuals who said that they lived in units that were subdivided in more than 15 units. This paints a picture of living conditions that are cramped and limited.

The interviewees were further asked about their monthly rent, minus utilities. Up to 50 per cent of the respondents (25) said that their monthly rents were between HK$3,000 AND HK$4,000.

The resident interviewees were also asked to describe the describe the conditions of their houses and whether or not their units faced problems like crumbling of concrete and walls, noise levels, poor ventilation and leakage of pipes. Noise and poor ventilation were the most common problems.

The main factor that has over the years contributed to the severe housing crisis in Hong Kong is the shortage of land for development. The land use designs of the city have also not been able catch up with societal changes. The government’s complete monopoly of the available spaces of land is the reason for the lack of development on the spaces that are available. While, it is within the powers of the government of Hong Kong to auction off parcels of land, the government only does so when it deems it necessary. The minimal supply of land has led to the construction of a limited number of homes. It is observed that in the 90`s, , there was an average of 23,000 homes being constructed every year in comparison to only 11,000 homes that have been constructed over the past decade. The interview further yielded tremendous amounts of data from the interviews it conducted with the private and public sector stakeholders. The data was also critical in gaining an understanding of the causes of the housing crisis in Hong Kong and possible solutions to it.

4.2 Causes of the Housing Crisis in Hong Kong

From the responses obtained from the interviews it was evident that even the prices for the smallest of flats in Hong Kong were extremely high. The subdivided housing issue has brought about a major imbalance in the supply and demand of housing. The underutilization of land in Hong Kong can largely be attributed to the over reliance on revenues from the sale of land to sustain its budgets. Additionally, the absence of government solutions for identification and further development of residential sites is the problems ultimate root. From the research it was evident that in a big way, the government had either negligently or purposefully limited the amounts of land sold. The constricted supply of land for auction in a big way has been inhibiting development of new residential developments, which has been rather detrimental to the housing market. Higher housing prices are facilitated by the low supply of real estate and the high levels of demand for housing (Hui and Yue, 2006). The high housing prices make it hard for the low income families to even afford the subdivided apartments. Since 2008, the average price of a private home has seen a 76% rise (Huang, Shen and Zheng, 2015). It is seen that even with such inflation of prices in the private housing market that the government of Hong Kong has been negligent in putting up any forms of rental controls on properties that contain flats that are subdivided. Understanding the existing disparity becomes easier through doing a comparison of the cheapest, in some cases illegal and low quality private housing with the typical salary figures of the poorest in Hong Kong. Strong demands for construction coupled with a severely limited supply of the same have contributed to the high pricing in housing across Hong Kong (Huang and Shen, 2017). Hong Kong`s ever growing population is a major reality which always needs to be considered. The city`s growing population has certain characteristics which lead to housing problems. First of all, up to forty per cent of the population is made up of Chinese refugees (Ng et al., 2015). Most of these refugees are not capable of affording proper housing and end up crowding in tiny spaces. Another factor is that he inhabitation of Hong Kong is urban predominantly and is an overcrowded situation in a big way. Another factor is that the city witnesses higher birth rates in comparison to death rates. The fourth and final factor is that birth control is still not given a lot of consideration in the city. The housing situation in Hong Kong has been plagued by the ever rising refugee numbers and that has largely contributed to the shortage of housing in the city. This led the government to creating one of the world`s most comprehensive systems for public housing to accommodate the low-income families with subsidisation which allows them to pay rents that are significantly lower than the set market rates.

Hong Kong`s demand for public housing has with no doubt outweighed its supply. In 2012, the Hong Kong Housing Authority had up to 189,500 families that were eligible in the PRH waiting list. Such families wait for an average of three years to be accorded accommodation.

A comparison of the waiting lists size to the amount of created units points out to outweighing of supply of PRH by its demand. To accommodate all families on the waiting list, the supply of public rental housing would definitely need to increase. Hong Kong city houses myriads of old building structures, some of which date back beyond 60 years (Dwan, Wong, and Sawicki, 2013). Besides, the buildings lack proper maintenance regimen. Consequently, the buildings are susceptible to collapse and according to Leung, Michael, and Ken, (2015), this is not a rare phenomenon in Hong Kong. In the year 2010, a five storey residential structure collapsed at Kowloon and killed four tenants, displacing more than one hundred and severely injuring two (Associated Free Press, 2010). The same year, Hong Kong Building Department carried out extensive research for the understanding of the collapse. The concluding sentiments showed positive co-relationship of the wreck with failure in built structure, additional loading as a result subdivision, degraded building construction materials and improper maintenance (Report on Collapse, 2010). Moreover, the tragedy of fire is another crucial challenge in Hong Kong’s housing industry. The city buildings have no eloquent plans for fire escapes; escape routes rarely exist based on illegally constructed partition walls erected to subdivide the units (Yoshino, and Helble, 2016). Besides, the fire-rated doors are resoundingly absent in many low-class buildings which therefore motivates the vast spread of mild fires, if at all any. The absence of escape means, and fire-rated floors make tenants susceptible to killings upon the face of fires. The 2011 fire for instance in Kowloon’s Mongkok district spontaneously engulfed the residential flats, killing nine people alongside hospitalizing more than thirty. This work maintains that these challenges build on the inadequate political will to hold accountable offenders of laid building codes. There is a need for monitoring and auditing of the structure to ensure quality and standards are maintained in the existing structures (Ching, 2010). The housing sector in Hong Kong is also invokes environmental hygiene issues which Yang, and Yang (2009), identified in the subdivided housing units. Unto the subdivided units, additional plumbing fixtures are commonly done by property owners and at times the tenants. Improper installation of such facilities such as toilets frequently lead to seepage of water which induces corrosion, growth of harmful moulds which impact negatively on the tenants' health (Van Dijk, and Weitkamp, 2018). Besides, the absence of ventilated windows, poor air circulation contributes to worsening the sanitary environment for human health. According to the Hong Kong Housing Authority (2010), many housing structures in Hong Kong constituted of asbestos which when regularly inhaled causes cancer.

Overcrowding and a congested human environment constitute substantial issues since the advent of urbanization. Hong Kong is situated at the South Eastern end of China; an ideal position for Asia’s economic activity. This strategic position according to Chu (2013), has contributed to demographic blossoming into the city. Besides, Chung, (2014) notes that land value maximization and land usage maximization seemingly constitutes the fundamental principles governing the development of Hong Kong.

4.3 Solutions for the housing crisis

4.3.1 Reclamation of land

The reclamation of land has for many years been done in Hong Kong which is characteristically mountainous to expand the supply of usable land that is rather limited. More reclamation should with no doubt be carried out. It is worth noting that reclamation activities raise serious environmental issues as such procedures are not reversible. What that implies is that once land has been reclaimed, it cannot be possibly returned to a state that is natural and as such, the part of the ocean that is reclaimed gets lost forever (Harris, 2017). In Hong Kong, concerns have already been raised of protection of the harbour which once was the source of prosperity for the city coupled with the collusion of the government of Hong Kong with the territories real estate developers (Duan et al., 2016). That necessitates the need for precaution to be taken whenever undertaking reclamation activities. Hong Kong however, still stands to gain a lot of land supply from reclamation of land. There are several techniques for reclamation of land that range from dredging, whereby seabed swatches are stacked and stacked in piles that are huge, to other methods that are marginally less damaging but more expensive, like cement mixing which involves injection of cement into sea beds for purposes of creating foundations that are stable and that can possibly be built upon.

4.3.2 Construction of caverns

Hong Kong could dig deep to reserve its chronic shortage of land for building through bringing underground caverns to the mix. This would see the relocation of facilities like reservoirs and sewage plants within the city to caverns which would go a long way in freeing up land for housing. The hilly terrain of the city and its strong rock formations improve its suitability for underground caverns and that is particularly on the urban fringes (Millis, Chan and Wallace, 2018). Even though Hong Kong`s urban centres are quite dense, up to three quarters of the land mass of the city is made up of open spaces that are off limits for purposes of development, for example, protected country parks. Due to that, the city of Hong Kong faces a short fall of about 1,200 hectares which is more than 60 times the size of Victoria Park found in the city.

4.3.3 Urban renewal

Urban renewal has the potential of re-planning and restructuring urban areas to facilitate rationalized land uses whose designs are environmentally-friendly and efficient for road networks and regional transport (Zheng et al., 2015). During such a process, it would be prerequisite to introduce open spaces and community welfare facilities are introduced to the relevant areas, while structures with architectural, cultural and historical value are preserved and revitalized to the greatest extent possible. Urban renewal processes take between 7 to 11 years from the onset of planning it when they are completed and this is dependent on individual project`s circumstances. While the buildings that have been redeveloped should eventually contribute to the supply of housing, the displacement of occupants for prolonged periods would bring about additional demand for land and housing. Additionally, as a result of the fact that majority of the sites whose redevelopment value is high have been redeveloped, there has been a trend of diminishing plot ratio gains upon old buildings redevelopment. As such old buildings demolition and further redevelopment does not necessarily lead substantial net gains in the number of new flats. The primary objective of such kind of a strategy should be addressing the problem of urban decay and further improving resident`s living conditions especially those who live in conditions that are dilapidated and not majorly as a means of providing sources of land supply that are efficient and secure (Nesticò and Sica, 2017).

4.3.4 Government role

The policy adopted by the government to control the amount of new land available to developers, through which it is able to earn billions of dollars years in revenue, creates a supply scarcity which leads to land prices that are even higher. Developers have from time to time complained that they face a thicket of regulations whenever they embark on converting private pieces of land they purchased for residential purposes. In Hong Kong today, private developers hold over 1,000 hectares of agricultural land in new territories (Lau, 2018). Leading property developers have over the years accumulated agricultural land reserves that are massive which have, however, been left idle as a result of the difficulties behind getting them rezoned for residential purposes. Land premium negotiations and getting approval from the Town Planning Board are both big hurdles. In the past, one key factor why authorities were reluctant of allowing the reclassification of land plots for residential purposes was the lack of infrastructure facilities. It is necessary that partnerships are forged between private developers and the government to construct both subsidized and public housing on the farm land already owned by the developers (Rossini, 2019). The government would then provide the infrastructure necessary for the land developers while the private developers will be required to set aside part of the land site for public housing units. There is concern that such a co-development model would bring about suspicion of government-business collusion. To address such an issue, it would be prudent to set up a mechanism that is open, transparent and fair. It would also be necessary for the government to overcome its resistance to amendment of ordinances and embracing businesses based on the economy of sharing. Failure to do so have for a long time held Hong Kong back from realizing the benefits of this model for emerging business in which accommodation that is not occupied is utilized as an innovative option for housing. It would be prudent if the government gave a close consideration to subdivided units. There are more than 200,000 people who live in such types of housing whose living conditions are not satisfactory. There however exists no legal definition for subdivided units which makes it hard for authorities to impose regulations that would ensure the safety and health of residents. The government also really needs to put in consideration what is really required between more cars and housing. Hong Kong can endeavour to turn parking garages into spaces that are livable. Even though the city`s public transport system is world class, there has been an increasing number of private cars. The government could with no doubt draw from the success of Singapore in curbing the trend through introducing a stringent cap on the number of cars on the road, hefty fees and taxes. When the government finally succeeds in controlling the growth in the number of vehicles, it should then embark on turning the car`s parking garages into homes. The public and private sectors cannot overcome the housing challenges in the city by their own. The government must be in full support of their activities and work on changing building codes and further offering incentives that would go a long way in encouraging social enterprises and developers to be creative in how they go about designing and constructing future residential projects (Valença, 2015).

4.3.5 Role of the construction industry

It would also be prudent if the construction industry was able to address its change resistance and overcoming a lack of innovation that is systemic. Today, primarily, prefabrication is used in Hong Kong for purposes of putting up public housing. However, the city would benefit from the wider adoption of innovative solutions like “modular integrated construction” and prefabrication which would help it build homes in a more efficient way. With digital disruptions and new technologies being the new norm today, it is necessary to look into ways that can effectively address the housing situation.

Chapter Five: Conclusion

This research is a descriptive study of the causes of the housing crisis in Hong Kong and its solutions. The method of the research has been to collect, systematize and evaluate the responses of different interviewees both residents of the city of Hong Kong and other public and private housing stakeholders. There is a close relationship between housing and human living. Homes are more than physical spaces and have an effect on the social and economic well-being of people. Hong Kong has been confronted with massive problems of housing. Physically, the size of the city is less than four hundred square miles with about thirty three square miles of these being overcrowded with most of the city`s population. There are extreme land shortages in the city with most of it being steep, rocky and developed only partially as a result of social and political reasons. The study identified four factors that are interrelated that contribute to housing crisis in Hong Kong: influx of refugees, increased population growth, shortage of land and political influence. Land shortage is the main contributor of the housing crisis. Over-population largely comes as a result of the steady increase in Chinese refugee’s immigration from mainland China, the higher birth rates in comparison to death rates, shunning of family planning and the predominant pattern of urban inhabitation. The political factors that contribute to the housing crisis involve the reluctance of the government in sale of land. The study proposed different solutions to the housing crisis including reclamation of land, construction of underground caverns and urban renewal. The study further explored what the government and constructors can do to help curb the crisis. All these solutions are based around increasing the supply of land as that is the main reason for the housing crisis. From the study, it is evident that most of the housing problems in Hong Kong and that includes even those that stem from subdivided housing pertain to a source that is common: an imbalance between the demand and supply for housing. It has been established that government legislation in terms of the quantity of available for construction have led to astronomical housing prices and the need to construct units that are subdivided. The government should come up with long term plans that will make land more readily available for purposes of residential construction. In the event more land was to be made available for residential development, new and sustainable high-rise apartments would be put up and that would create thousands of new living units that would not be affected by aging and unhealthy conditions. With increased available housing, the existing imbalance between demand and supply of residential living will with no doubt be reversed.

It is also observed that the Public Housing System in place in Hong Kong has not been effective in meeting the needs and expectations of the low income earners who rely on it as a result of the long waiting times. The government needs to work on accelerating public rental housing construction plans to do away with the waiting time. This study recommends an overall increase in plans for public rental housing constructions together with expedition of all current plans. That would help in alleviating the public housing demand and also facilitate the moving of tenants of subdivided units into the public rental housing system. Further to improve the living conditions of tenants of subdivided units, the government should make concerted efforts to crackdown on landlords who do not care. Majority of the landlords forgo building codes and health and safety measures whenever they subdivide their buildings in a bid to cut costs with zero regard for their tenant`s wellbeing. The government should force landlords to make appropriate building renovations to remedy the multitude of hazards construction practices that are shiftless have exposed tenants to.

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