HONG KONG, Jan. 31, 2011 /PRNewswire-Asia/ -- Today RICS announces its Hong Kong housing report titled "Report on Housing Affordability in various Asian Cities and on the Forecast of Housing Needs in Hong Kong in the next 5, 10, and 20 Years". The purpose of this report is to assist the government in formulating long-term housing strategy based on the future housing needs in 20 years, and by making reference to the affordable housing policies of other Asian Countries. RICS is submitting this report to Transport & Housing Bureau for consideration when finalizing the Bureau's annual budgets to the Financial Secretary.
Commenting on the buoyant housing market in Hong Kong, Mr David Tse, RICS International Governing Councilor and Chairman of RICS Hong Kong Housing Task Force said,
"Last September RICS has commissioned the Hong Kong Polytechnic University to conduct a comprehensive study to assess the medium to long-term housing needs in Hong Kong, and the effectiveness of the affordable housing policies in various Asian Countries. The research report shows that Hong Kong is ranked the top in terms of PIR, the median house prices divided by median familial disposable incomes per annum, amongst the other Asian Cities. At present, there appears to be a mismatch between the supply of small sized flats, Class A flats, and the needs of the average households, but in recent years, we noticed that the unit price per sq ft price of large sized flats, Class C, D and E flats, of three or four bedrooms were rising much faster than those small sized flats with one or two bedrooms. RICS is calling on the government to conduct regular surveys on the future aspirations of the average households on types and sizes of flats before laying down appropriate housing and land supply policies to meet the functional and future needs of Hong Kong households."
Research data confirms the overheating of the Hong Kong property market while the private housing market is severely unaffordable, with 30% of Hong Kong Households' incomes sandwiched between private housing and the government's public rental housing. This trend is expected to continue for the next 20 years.
Forecast of Private Housing Needs in Hong Kong
| RICS' forecast: base number | RICS' forecast: total no. of new flats (take account of other factors, e.g. demolitions) | |
| For 5 years (till 2016) | 20,200 each year | 22,000 each year |
| For 10 years (2021) | 19,900 each year | 22,000 each year |
| For 20 years (2031) | 17,900 each year | 19,500 each year |
10% shortage in Government's target of private housing supply
Based on the housing needs of Hong Kong's demographics, the government should be providing enough land for about 22,000 per year for the next 5-10 years. Note that the Chief Executive's 2010-11 Policy Address presented an average of some 18,500 units per year based on previous take-ups, thus requiring only 20,000 units per year. With such a deficiency, RICS expect that extra land is required.
My Home Purchase Scheme
In response to the voices from the sandwich classes, the "My Home Purchase Scheme" had recently been announced in the 2010-11 Policy Address. It aims at providing 1,000 housing units a year for the sandwich-class populace of Hong Kong. Given the income and asset ceiling requirements of the My Home Purchase Scheme applicants, 35% of total households in Hong Kong are eligible for the Scheme, according to the 2006 Census results. Therefore, this will cause a severe undersupply of these housing units, unless amendments are to be made regarding the income ceiling and/or the amount of housing units proffered, this scheme is not going to address the housing demand of all middle-income people of Hong Kong.
Mr KK Wong, Chairman of RICS Hong Kong said,
"After 5 months of intensive research, RICS is glad and ready to submit this report on local housing needs for government to consider. In our recommendation to the government, we have drawn reference from nearby Asian countries or cities including public rental housing that targets middle-income residents in mainland China, rent-to-own option for affordable housing in Singapore and Malaysia and concessionary mortgage provision targeting young people in Taiwan. We wish government could take these as examples and form its own sustainable and long-term housing supply strategy for Hong Kong."
Price-to-income ratio (PIR) of various international cities
| Ranking (2010) |
City | PIR (2010) Note 1 | PIR (2009) Note 1 | Homeownership Rate Note 2 |
| 1 | Hong Kong | 22.72 Note 3 | 21.19 | 52 % |
| 2 | Shanghai (mainland China) | 20.68 | 18.08 | 80 % |
| 3 | Seoul (South Korea) | 16.29 | 14.35 | 52 % |
| 4 | Bangkok (Thailand) | 15.96 | 10.5 | 56 % |
| 5 | Singapore | 14.35 | 21.29 | 89 % |
| 6 | Tokyo(Japan) | 11.64 | 19.75 | 45 % |
| 7 | Taipei (Taiwan) | 11.5 Note 4 | 10.53 | 82 % |
| 8 | Kuala Lumpur (Malaysia) | 11.27 | 10.87 | 80 % |
Professor Eddie Hui, Principal Investigator, Department of Building and Real Estate, The Hong Kong Polytechnic University commented on the report,
"Based on the survey results, we found that housing in general has becoming less and less affordable as property prices continue to escalate. This situation has become worse since the ceasing of Hone Ownership Scheme construction and supply in 2003. For those who are not eligible for public rental housing, or do not seek government housing assistance, purchasing a property has a big impact on their living quality. It could only be worse for them if interest rates rise in the future, or they are forced to purchase even more costly flats due to the lack of supply of lower-cost private properties on the market."
For more information on the research report, please visit http://www.ricsasia.org/newsDetail.php?id=305®ionID=0.
Please download press conference photos at http://creativegp.com/RICS/RICSHousingReportLaunch_For_Media.zip
Remarks:
PIR (2009 and 2010) is the basic affordability measure for housing in a given area. It is generally the ratio of median house prices to median familial disposable incomes, expressed as years of income.
| Note 1: | Sources from Numbeo Property Index for 2009 and 2010. |
| Note 2: | Sources from Hong Kong Housing Authority, The Singapore Department of Statistics, Japan Statistics Bureau, Malaysia National Property Information Centre, Kim and Wachter's paper. |
| Note 3: | Figure not available from Numbeo Property Index for 2010. It's an estimated figure adjusted based on data from Hong Kong Census and Statistics Department. For comparison, despite with different definitions, HangSeng Bank's PIR was 19.8 as at 2009 for 600sq.ft (B-Class) on HK Island. |
| Note 4: | Figure not available from Numbeo Property Index for 2010. It's extracted from http://www.property-report.com/site/taiwan-fears-property-bubble-10606 with slightly different definitions. |
About RICS & RICS Asia
RICS (Royal Institution of Chartered Surveyors) is the mark of property professionalism worldwide. It covers all aspects of property, construction and associated environmental issues. RICS has 150,000 members globally and represents, regulates and promotes the work of property professionals throughout 146 countries.
The RICS Asia supports a network of over 11,000 individual professionals across the Asia region with an objective to help develop the property and construction markets in these countries, by introducing professional standards, best practice and international experience. It promotes RICS and its members as the natural advisors on all property matters. It also ensures that services and career development opportunities are provided to members. The RICS Asia region covers national associations and local groups locating in Brunei, Malaysia, Singapore, Thailand, The People's Republic of China and the SAR Hong Kong. It also has members working across the region such as Bangladesh, Bhutan, Burma/Myanmar, Cambodia, Indonesia, Japan, Kiribati, Laos PDR, Macao, Mongolia, Nepal, North Korea, South Korea, Taiwan, The Maldives, The Philippines, Timor East and Vietnam. For more information, please visit: www.ricsasia.org.
Media enquiry, please contact:
RICS Asia Public Relations Representative
Ms Belinda Chan / Ms Ava Lau
Tel: +852-2372-0090
Fax: +852-2372-0490
Mobile: +852-9379-3045 / +852-9829-2913
Email: belinda@creativegp.com / ava@creativegp.com
