Generation 40s – 四十世代

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Why Hong Kong is failing to rein in housing prices

CommentInsight & Opinion
2017-02-23
Victor Zheng and Roger Luk say the government’s control measures, which are meant to favour end users, are in fact working at cross purposes due to the over-regulation of mortgages. As a result, the secondary market is stagnant and unable to match supply with demand to moderate prices

Last November, the Hong Kong government again raised the stamp duty for buying residential property, yet housing prices also reached a new high. Apparently, these additional “spicy” measures could not arrest the price hike. For the past four years, the government has endeavoured to stabilise the housing market, but in vain. So, why don’t these demand-side measures work?

When the global financial tsunami hit in September 2008, Hong Kong’s housing market was already grossly imbalanced, with a mismatch in demand and supply. Owing to the city’s linked exchange rate system, low interest rates and quantitative easing in America, excessive liquidity has altered the landscape of the housing market.

Since 2009, the government has introduced various measures in an attempt to cool excessive demand, including increasingly aggressive controls, from 2012 onwards, that are meant to prioritise homebuyers and depress investment demand, particularly from non-residents. Yet, prices had risen a further 50 per cent by the end of last year, notwithstanding the fact that the US Federal Reserve had started to raise interest rates a year earlier, in 2015.

The measures were supposed to drive away speculators and investors, leaving behind end-users. But it has not been the case. Where did the “spicy” measures go wrong?

The taxation measures set out to suppress non-user demand with a levy, while the mortgage measures are meant to give users priority. Together, they are supposed to facilitate the ownership of housing at an affordable price with affordable financing. Unfortunately, as it turned out, the measures worked against each other, with undue restrictions on mortgages offsetting the advantages in taxation.

Mortgages are probably the safest form of lending but our bureaucrats think otherwise. With the financial crises of 1997 and 2008 still fresh in their minds, they fear a recurrence of negative mortgages and systemic risk. Those so-called “countercyclical” measures – including a 40 per cent down payment, stress test, maximum tenure, maximum debt service requirements and so on – induce a sense of comfort among bureaucrats, but they fail to see that the subprime mortgage crisis was unique to America.

The over-regulation of mortgages has brought undesirable side effects. Trading up is out of reach. The secondary market is quiet, thus losing its role of matching demand and supply through price negotiation. When the resale market is not functioning, the primary market (new development) dominates. Around 20,000 units of new private housing come into the market each year, accounting for 5 per cent of the housing stock but 30 per cent of transactions in recent years. Why?

Homebuyers are turning to the primary market due to practical considerations. Developers are counteracting the “spicy” measures with self-financing by way of a second mortgage to help buyers with the down payment. As it is tantamount to a deferral of receipt of payment, sellers in the secondary market are unable to match such terms.

In addition, developers are offering tailor-made units that match affordability. They are building smaller flats while upholding high prices (in terms of price per sq ft). Studio flats of less than 200 sq ft are not uncommon.It explains why many Hongkongers worry about further price hikes despite the government’s control measures.

The taxation measures were supposed to turn the housing market around in the buyer’s favour. However, they have benefited developers simply because the mortgage terms are too harsh. Even genuine homebuyers find it hard to get sufficient financing. The problem with mortgage measures is they are case-based rather than portfolio-based. Regulatory parameters have become the de facto mortgage terms. The collateral damage is a grossly distorted housing market unfavourable to resale.

The “spicy” measures are supposedly contingent and targeted. But the over-regulation of mortgages has thwarted their policy intent and crippled the market. There is no better redress than reviving market dynamics. Actually, banks know better than bureaucrats about credit and risk management. To turn the market around, a two-pronged approach is necessary:

First, abandon case-based regulation, such as setting ceilings on mortgage ratios, debt-service ratios, tenure and so on, and replace it with portfolio- and risk-based regulation. Second, set portfolio-based regulatory parameters in terms of mortgage ratios, debt-service ratios and stress tests. If any bank does not meet them, it should buy mortgage insurance.

The primary argument for demand-side management measures is the prolonged shortage of supply and falling affordability. However, it is not supported by the latest official figures. At the end of 2015, there were 1,092 domestic residences for every 1,000 households on average. The 5 per cent rate of public housing vacancy is structural, but the 14 per cent figure for private housing suggests a mismatch.

One may infer that there are flats seeking occupants and households seeking accommodation. Actually, there has been an excess of private housing for years. If the government’s measures were effective, the excess ratio would not be three times the structural vacancy.

Meanwhile, the policy goal of allotting public rental housing to households within three years of application is still unattainable, and the queue is growing fast. Even if these demand-led measures were needed, they would not help resolve the problem.

Public and private housing are mutually exclusive and interchangeable. The re-emergence of subdivided flats in private housing means that the core problem is not an imbalance but a mismatch of demand and supply. Without a holistic housing policy, the current measures are driving those still eligible for public housing to queue for it indiscriminately, thus distorting the picture. Apparently, the government is still undecided about the policy for subsidised housing, as evidenced by the pilot sale of flats supposedly for rental. Should our housing policy be primarily accommodation-based or ownership-based?

It is often said that businessmen are smarter than bureaucrats in challenging markets. There is no surprise that the “spicy” measures and housing prices are trapped in a vicious cycle as mortgage measures in particular defy market reality. Housing demand and supply are not synchronised. The coexistence of public and private housing only adds to the complexity. Unless and until they are separate markets and market dynamics is restored, the impasse will carry on.

Dr Victor Zheng is assistant director of the Hong Kong Institute of Asia-Pacific Studies at the Chinese University of Hong Kong. Roger Luk is a retired banker and an honorary research fellow at the institute


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香港青年--革命新一代 ?

2016-09-24

 李世鴻

自反國民教育、雨傘運動到立法會出現年輕新面孔高票當選,新一輩青年人(泛指18到35歲)已經是政治、經濟、教育等政策的有力持份者。他們與香港上一輩的社會棟樑有什麼不同的特質呢?香港各界的領袖又可怎樣與他們協作?

受一位熱心青年服務的社會工作學者啟發,筆者試從流行曲當中揣摩年輕人的情意結,探索一下香港青年人在心態上的年代演變。

譚詠麟在八四年的作品《傲骨》:「誰知我內心多苦悶,一切沒法如願 …… 從開始至今多考驗,手裏利劍常斷。」青年人的內心掙扎及事與願違,歷代如是。不過,當時青年的主流思想是要有志氣,不要給人看低,誓要奮鬥幹一番事業。「不可以,重複這怒叫聲,自信他朝一柱擎天。」當中的精神是我不服,於是我要發奮,在現有的遊戲規則下出人頭地。

對政府不滿世界亦然

九三年Beyond樂隊黃家駒在《海闊天空》中,同樣面對別人冷眼,「多少次,迎着冷眼與嘲笑」,不過,心態及所追求的有點不同:「從沒有放棄過心中的理想……原諒我這一生不羈放縱愛自由。」青年人不一定要攀上職業階梯,相反是高舉自由,追尋理想。可是,心態充滿矛盾,如「背棄了理想,誰人都可以,那會怕有一天只你共我。」當現實與理想衝突時,務實妥協是普遍的想法。

到了一三年,備受年輕人欣賞的樂隊Supper Moment在作品《無盡》中展示出現實與夢想的鴻溝:「夢想於漆黑裏仍然鏗鏘,仍然大聲高唱,仍然期待世界給我鼓掌是妄想。」對理想的追尋更加堅決,如「踏上這無盡旅途……或許到最後沒有完美句號,仍然倔強冒險一一去征討……誰又能鑑定你的醜惡與美好。」也許沒有最好的結果,亦義無反顧,(至少在情感上)革命起來:「人生夢一場革命至蒼老。」

香港中文大學2015/16年度的香港青年生活質素指數為99.68,比上年度跌0.62點,亦較基準年(2012/13)低0.32點,即青年生活質素比之前差。分析顯示,香港青年覺得自己對政府、教育、房屋及就業等息息相關的政策,均未能參與制訂,產生無能及無力的感覺。這可能是眾多青年生力軍擁抱「革命」的概念,並加入社會運動及公民抗命的深層動力。

年輕人對政府不滿及不信任,不是香港獨有,世界亦然。世界經濟論壇在2016年8月公布的《全球傑出青年年度調查》,在所有參與調查的地區中,年輕人(18至35歲)認為政府腐敗(58%的受訪者)、官僚機制失效(30%)及政府缺乏責任感(29%)是本身國家最為緊迫的問題。

宜增加對公眾透明度

有所不同的是對前景的希望及對自己的影響力兩方面。在以上的全球青年調查中,受訪者對當今世界持謹慎樂觀的態度,價值觀積極進取。70%的受訪者認為當今世界充滿機會,50%相信他們可以為本國的決策貢獻積極力量。千禧一代擁護新技術,把對互聯網的連接視為賦權的關鍵。

面對香港年輕人對政府的失望及對自身的無力感,政府、商家、教育界、家庭及社會各方的領袖,都有角色扭轉局面,成就更積極正面的合作。

政府宜主動吸納不同背景的青年加入政府制度,立法會加入了年輕新人的是由選票帶動的開始。對於社會關注的政策,政府以往向大眾的諮詢形式,或向特定持份者的「摸底」,今日已經不足夠。新一代人(或思想)重視自主,政府在制訂重要政策的過程及考慮因素,宜增加對公眾的透明度,甚至容納公開的討論辯論,打破黑箱作業或偏袒財團勢力之嫌疑。

在教育及社會價值觀方面,學校與家長值得推動孩子發展多元潛能,跨越應試思維與操練。政府透過大學積極協助有志有才能創業的年輕人,讓不同才能的年輕人有渠道去追尋理想,發揮所長,貢獻社會。商界與消費者亦有角色給予一些非主流的產品與服務機會。整體而言,香港可推廣尊重及欣賞不同才能及志向的大都會文化。成功人生不一定要名校高分、證書獎項、高職厚薪、名車豪宅等。

今日的青年是明日的領袖,他們富有「革命」的志向才能後浪推前浪。他們衝擊政府,亦衝擊今日的我們反思如何締造多元進步的社會。

作者為香港科技大學工商管理碩士校友會會員