As Hong Kong property mogul Li Ka-shing predicts that the price of homes in the city look set to stay high for at least two years, pressure is mounting on chief executive Carrie Lam to make more homes affordable for ordinary citizens amid a growing Chinese investment presence.
"I cannot see how property prices would fall in the coming one to two years," the 88-year-old head of Cheung Kong Property Holdings and CK Hutchison Holdings told a news conference last month.
"The force from buyers is very strong," he said.
But local people said there is more at work in the market than just strong demand.
"Of course, property prices are high, because of the amount of speculation there is," a 20-something Hong Kong resident surnamed Choi told RFA, adding that the private landlord sector has had a similar impact on rents.
"Some people have government flats, but they don't live in in them themselves; they rent them out, which is very unfair on a lot of people," Choi said.
"I and my family have been waiting for a government flat for years, but we haven't managed to get one yet," he said. "We have been renting in the private sector instead. I hear that there's a seven-to-eight-year waiting list to get a government flat now, at least."
"They should be coming up with some policies [to fix this]," he said.
And an octogenarian Hong Kong resident surnamed Tai said she is currently in housing that is inappropriate for her needs, but that attempts to find better housing have been in vain.
"Of course, people can get a place if they are rich, but most Hong Kong apartments are out of reach of ordinary people," she said.
Beijing’s preferred candidate
Lam was Beijing's preferred candidate for the job, and was voted in last month by a 1,200-strong election committee packed with supporters of the ruling Chinese Communist Party.
Pro-democracy campaigners said her election was "regrettable" and said she couldn't be trusted to put the interests of residents ahead of ties with Beijing.
Hong Kong's housing secretary Anthony Cheung admitted on Tuesday that government attempts to cool the market enough, using tax regulations, for ordinary citizens to have access to affordable homes seem to be having little effect.
Meanwhile, some commentators are pointing to a political dimension to the problem, citing incoming Chinese developers who are increasingly major players in the sector amid falling profit margins in their traditional stamping ground.
According to a report from property consultancy Jones Lang LaSalle in 2016, one in 10 Hong Kong families will be living in homes built by mainland developers by 2019, as mainland developers buy up land aggressively at periodic land auctions.
"The administration of Carrie Lam faces not only the rapacity of local property developers, but also the wealth and power of Chinese state-owned enterprises," political commentator To Yiu-ming said in a recent commentary broadcast on RFA's Cantonese Service.
In mainland China, prices have soared in recent years to 20,000 yuan (U.S. $2,900) per square foot in some regions.
Now, rising prices in Hong Kong having "a seriously negative impact on social stability," To wrote.
"The monumental challenge now facing Carrie Lam is whether or not she can employ special measures to cap residential property prices, perhaps even shrug off the interests of Chinese state capital, perhaps by not allowing them to buy land or invest in the sector at all," To said.
He said curbing state-owned Chinese enterprises could prove difficult, however, given the huge political clout that they wield with the backing of the ruling Chinese Communist Party.
Demand remains high
Housing secretary Cheung said prices are high because demand remains high, despite the fact that investment sales fell from 30 percent of total properties sold to just six percent at the end of last year.
He appeared to blame social activism for the lack of supply of new apartments.
"There is overall a lack of social determination to increase supply ... which is a pity given that the whole of society is very concerned about high property prices and high rents," Cheung said.
"When we try to push forward with a lot of housing projects, we run into difficulties in many areas, with people putting forward various reasons, like there is too much density, or there are environmental or traffic impacts, which makes for delays and difficulty in promoting the project," he said, citing a six-to-four ratio of demand to supply in the sector.
A realtor who gave only his surname Yan said prices of homes in Hong Kong are also based on the psychology of the market, however.
"[Demand remains strong] because nobody knows how high prices are going to go," he said. "And investment landlords are likely to be much more ruthless at sticking to their asking price than residential owners."
"The landlords tend to put their prices up by around 10 percent as soon as the government brings out a new set of policies [to tackle the problem]," Yan said.
Don’t bother fixing it
Youths play basketball in front of residential homes at a public housing estate in Hong Kong, April 1, 2017.
Credit: AFP
But a public housing tenant surnamed Wat said the government shouldn't bother trying to "fix" the market.
"The Hong Kong government's policies are all totally wrong," Wat said. "Shortly after the 1997 handover, [then] chief executive Tung Chee-hwa said building more residential properties was a good thing, so why didn't they?"
"The government tried to find developers, but the scarcity of land was a big problem, which made prices rise. What can you do? Demand outstrips supply," he said.
"I don't have money to invest in property, but I know people with money who do, and you can't stop people doing what they do, because it's a free market," he said. "The only solution is to build more housing units, including public housing."
According to To, Lam's administration is unlikely to want to upset major Chinese state-owned enterprises with policies that curb the profits they can reap in Hong Kong.
He citing the signing of huge public infrastructure contracts in recent years by Chinese state-owned firms and consortia that were involved in a lead-poisoned drinking water scandal in 2015 and linked to worker deaths in the construction of the massive Hong Kong-Macau-Zhuhai Bridge.
"Mainland Chinese companies were involved in all of these cases, but there has been no sign of any disciplinary measures against these companies from the government," To wrote. "It's hard not to conclude that the government has set public welfare to one side, and is letting these contractors off lightly."
To said Beijing's political influence and economic interests in Hong Kong are substantially more than they were five years ago, sparking political and social tensions.
"Carrie Lam is right to say that the responsibility of the chief executive is to the Hong Kong Special Administrative Region, and also to the central government in Beijing," he wrote.
"But this grandiloquent statement suggests she is trying to be all things to all people. It's probably more accurate to say that she's being somewhat disingenuous, if not trying to evade the issue altogether," To said.
Reported by Wen Yuqing and Dai Weisen for RFA's Cantonese Service. Translated and edited by Luisetta Mudie.
