HONG Kong is renewing a push to tackle the city’s chronic housing crisis, spurred on by Chinese President Xi Jinping’s call for “more decent” homes for the poor in one of the world’s most expensive real estate markets.

The city has embarked on a US$3.3 billion plan to build about 30,000 temporary apartments over the next five years, which Housing Secretary Winnie Ho has said is a “very important social project”. The aim of the programme is to give people an option to move out of cramped quarters while waiting for public housing. Critics say it only shows the government’s inability to deliver enough permanent homes.

The issue has taken on added urgency after China identified the housing crisis as one reason behind the sometimes-violent, pro-democracy protests of 2019, and told Hong Kong to deal with it. While successive administrations have struggled for years, the latest “light public housing” project, first proposed by Chief Executive John Lee in his maiden speech last year, has been touted as a potential effective, short-term solution.

After taking office on Jul 1, Lee spent the first few months prioritising returning Hong Kong to normal life from the pandemic and restoring its status as a finance hub. The former cop is now turning his focus on fixing a few social issues including housing despite some public discontent and questions over cost.

“It’s a stopgap measure in extraordinary times,” said Ryan Ip, co-head of research at think tank Our Hong Kong Foundation. There’s a shortage of supply in public housing for the next five years, and the 30,000 units “can fill in the gap in the meantime”.

For decades, Hong Kong has prospered mainly acting as a gateway to a rising China, with a real estate boom producing legendary billionaires such as Li Ka-shing. Yet the city has largely been unkind to the poorest. Government data from 2021 showed about 215,700 people, or roughly 3 per cent of the population, lived in 108,200 subdivided units — some of them in stacked bed spaces called “cage homes”.

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In 2021, Xia Baolong, the director of the cabinet-level Hong Kong and Macau Affairs Office in Beijing, pressed for the elimination of the city’s substandard housing altogether by 2049, alluding to the year that marks 100 years of Communist Party rule in China. Speaking on the subject at an event last July to celebrate the 25th anniversary of Hong Kong’s return to Chinese rule, Xi lent the issue even more weight.

Light public housing, which will feature modular construction for speed, has been presented as a temporary fix when supply of traditional public rental apartments is struggling to keep pace with demand. The government built about 69,000 public rental units in the five years through 2022. It aims to build 360,000 such homes in the next decade, with two-thirds coming in the second half.

The size of the relatively smaller light units ranges from 13 square metres (140 square feet) and 31 square metres. With the initiative, Hong Kong aims to cut the waiting period for public housing to 4.5 years from 5.6 years.

Way too much

However, critics such as Brian Wong, a researcher at Liber Research Community, say the temporary project is inefficient and costs way too much. The independent think tank says the cost per square foot is 25 per cent higher than that of traditional ones, citing calculations from government data.

For others like Ho-fung Hung, a political economy professor at Johns Hopkins University, it is a backward step that revives memories of sub-par makeshift projects with poor facilities during the British colonial era. “It could be an indication that they couldn’t really tackle the challenge of building more permanent public housing fast enough,” he said.

Chief Executive Lee’s administration has earmarked eight sites across the city for the light housing project, and one of them is  Kai Tak — a New York Central Park-sized area being redeveloped on the old airport that shut down 25 years ago. But residents of the middle-class neighbourhood aren’t happy with the move. They say an influx will strain infrastructure that’s still inadequate after the government failed to deliver many promised amenities on time.

“We understand that Hong Kong needs land to build public housing for people in need, so we never objected until this time,” said Andy Ng, an accountant who bought an apartment in the Upper RiverBank project early last year. The government is squeezing thousands of people on a single plot of land without planning or consultation, he added. “The district simply can’t stomach so many people.”

However, the unspoken concern of residents who bought apartments in Kai Tak for at least a million dollars each is the risk of a decline in their property value.

Wealth gap

The tension highlights the wealth gap and the central role real estate continues to play in the world’s least affordable city. For those with means to own an apartment, it is a safe bet after a two-decade property bull run. Their fortunes and sense of well-being are tied to their home value, whereas the reality is harsh for those who are priced out of the market.

The pandemic has also exacerbated Hong Kong’s wealth gap. An Oxfam report last year said the city’s richest residents made 47 times more than the poorest, increasing from 34-fold in 2019. Median monthly income of the poorest households dropped 23 per cent to HK$2,700 (S$459) in the three years, while that of the most well-off rose by 6.3 per cent to HK$127,600, Oxfam said.

The city’s real estate market is on the cusp of a rebound following a slump in 2022 when it reported the lowest number of transactions in nine years. Even a 15 per cent decline in prices failed to make them any more affordable, with a two-bedroom apartment of 500 square feet costing an average HK$5.8 million in Sham Shui Po, one of the poorest neighbourhoods.

While Lee’s administration faces a massive challenge in ensuring all Hongkongers have a decent roof over their heads, it sees light public housing as a good start to reaching that goal.

No one wants to see subdivided flats in an advanced city like Hong Kong, Housing Secretary Ho wrote in a state-owned newspaper this month. “We are all part of this society, I hope we can let grassroots families improve their lives with much more empathy,” she said. BLOOMBERG