The stagnation of public rental housing privatization : from the perspective of path dependence

Abstract

This research asks a question that why a huge public rental housing system could persist or even expand in a laissez-faire city state like Hong Kong, and it could be rephrase into "why there is stagnation of privatization of public rental housing in Hong Kong", given the fact that two attempts were made to privatize public rental housing, but both of them failed to provide a preferred result. This research answers the above question from the perspective of path dependence, by assuming the Ten-Year Housing Plan in 1973 as a start of critical juncture. It then examines its effect towards the two focus points: Sales of Flats to Tenants Scheme (SFSTS) and Tenants Purchase Scheme (TPS). The result of analysis shows that the following characteristics of the housing policies in 1970s were the starting point of path dependence which eventually obstructed the implementation of SFSTS and TPS: I) the expansion of public rental housing; 2) the creation of HOS as a substitute of public rental housing flats for sale; 3) the ideology of laissez-faire which suggested the Government to avoid competition with the private market 4) the homeownership ideology which boosted up the demand for housing.