Rent rises required to build more Hong Kong housing
- The Housing Authority will need more money if the Hong Kong government is to meet its accommodation targets for the less well-off
From public rental leases to subsidised home purchases, the Housing Authority has an important role in providing affordable accommodation. The job is not easy, though.
As Hong Kong’s biggest landlord and property developer, it is also struggling to maintain healthy finances to fulfil its mission amid economic fluctuations.
The authority has signalled the need for rent increases, despite a small surplus of HK$174 million (US$22.2 million) in 2023-24 rental operations and an overall surplus of HK$15 billion. The body fears a deficit of more than HK$4 billion in its rental operations in four years’ time if no adjustments are made.
Income from the sale of subsidised flats is also expected to fall next year.
Officials would not be drawn on the size of the increases at this stage, saying they would be carried out according to the standing mechanism, which takes into account changes in household incomes over the years. Given the economy is gradually recovering from the Covid-19 pandemic and jobs and incomes have stabilised, such adjustments are not unreasonable.
The looming rent rises may upset many tenants who are used to repeated rental freezes at times of economic hardship, but such concessions should be the exception rather than the rule. As normality returns, a review is only fair.
The city’s massive output targets have put enormous pressure on the authority. The latest cost of building a public flat is said to have increased to HK$920,000, up from the previous HK$760,000.
Construction costs for subsidised flats under the Home Ownership Scheme have also risen from HK$900,000 to HK$1.09 million. The authority planned to build 110,000 public flats between 2023-24 and 2027-28, about a third of the government’s 10-year supply target.
It is expected that the remaining two-thirds, to be delivered after 2028, will require additional government funding to be completed.
The authority is unable to fulfil its mission without healthy finances. As of 2022, its 850,700 rental units and 436,600 subsidised flats were home to nearly 3 million people, or some 40 per cent of the population.
It must ensure there will be sufficient revenue from rent and property sales to deliver more affordable housing for the needy.
