“We will … increase the supply of small and medium-sized residential flats … by specifying in the land sale conditions requirements in terms of the minimum number of flats and the range of size of such units …”
2010 Budget Speech
“Why is Government bent on supplying more small flats?”
Question during Joint Business Community Luncheon, Friday, 12 March 2010
“Because that is what the people want!”
Response by Financial Secretary, John Tsang Chun-wah, 12 March 2010
What people want or what they can afford?
Property prices indicate what people want: They are willing to pay more per square foot for bigger flats than for smaller flats. This tells us clearly that people want bigger flats when they can afford it.
We only have small flats available
The average size of flats built in Hong Kong is only 45 sq.m. The average size of new public housing units is 60 sq. m. and the average new flat produced by private developers is 70 sq. m., well short of the average flat size of 100 sq.m. in Singapore. Small flats have proven to be the most profitable use of land for private developers and the most efficient (highest land premium) for Government. We now have too many small flats and very few larger ones.
Hong Kong ranks 70th in global Quality of Living index
The average living space per person is only 12 sq.m. in Hong Kong compared with 19 sq.m. in Shenzhen. The lack of quality affordable accommodation is a critical factor in Hong Kong’s low ranking (70th out of the 214 countries surveyed in 2008) in the annual Quality of Living Index by Mercer. A 2006 study for the Bauhinia Foundation by Enright, Scott & Associates concluded that the failure to deliver a high quality of life at a reasonable cost will hurt Hong Kong’s competitive position.
Affordable bigger flats
Let’s stop perpetuating the production of more small flats and push up the average flat size. Government must specify larger flats (minimum of 100 sq.m.) in land sales conditions. This will bring down prices enticing people to sell their small flat and trade up to larger flats. In turn, the increase in supply of the smaller second-hand flats will make it more affordable for first-time buyers to become home owners too.