The demand and supply of public rental housing in Hong Kong : an analysis

Abstract

Housing is politically important and thus governments tend to intervene in housing market a lot. Today, housing is one of most significant livelihood issues in Hong Kong. Solving the housing problem is accorded with top priority by the current Government. Therefore, the Government formed the Long Term Housing Strategy Steering Committee in September 2012 to make recommendations on housing strategy of Hong Kong for the next ten years. One of the areas for study is the sharp increase in number of Waiting List applications which is indeed an expression of imbalance between demand and supply for public rental housing. After the Global Financial Crisis, the number of Waiting List applications has doubled in five years, at a compound annual growth rate of15.4%. Such increase is a combined result of increase in demand, decrease in supply and inefficient allocation of public rental housing for Waiting List applicants. This dissertation firstly attempts to find out the factors and root causes leading to this phenomenon, and then tries to work out some possible solutions for solving the present problem of public rental housing. By analyzing the components of housing system namely demand, supply and allocation, the root causes leading to their changes are studied, with aim to explain the recent sharp increase in Waiting List applications for public rental housing in Hong Kong. The areas of analyses include the demographic changes, single non-elderly applicants, affordability problem for private housing, supply of new production and recovery of public rental housing flats for Waiting List applicants, eligibility for public rental housing, and the efficiency of allocation mechanism. In addition, the desire of Waiting List applicants for public rental housing is also studied through a questionnaire survey because similar secondary data are not available. Lastly, due to the inelasticity of supply of housing to demand, it is essential for the Government to take timely measures before crisis is happened which may eventually affect the effective governance, suggestions are thus made accordingly in the last part of this dissertation with aim to reduce the sustained imbalance between supply and demand for public rental housing in Hong Kong.