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Population factor critical in the land supply debate

作者: 周八駿 【2018-5-9】 Stanley Wong Yuen-fai, head of the Task Forc [...]

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Stanley Wong Yuen-fai, head of the Task Force on Land Supply appointed by Chief Executive Carrie Lam Cheng Yuet-ngor, on April 26 told the public Hong Kong’s shortage of land for public housing development is more pressing and agonizing than ever. It is not difficult to see why it is so “pressing”, since home prices have been soaring to new highs while the wait for public rental housing stretches and the number of families with no choice but to live in tiny spaces in subdivided apartments grows. The word “agonizing”, on the other hand, came as a shock. According to press reports, the Planning Department underestimated the city’s land shortage in its long-term territorial development outlook paper Hong Kong 2030+. Wong said Hong Kong will face a land shortage of about 815 hectares by 2026. This means the projected total area of land supply for housing in four near- and intermediate-term options listed in the task force’s recently released consultation paper will be well below the mark.


Therefore, it is necessary to turn the planned five-month public consultation over land supply measures into a “citywide debate” in a bid to build popular consensus on proper solutions by telling the public exactly how deep and complex a structural problem the land and housing supply in Hong Kong really is.

The economic, political and social structural problems facing the city today have become extremely complicated and deeply intertwined. The land and housing shortage is just one of them. In analyzing the land and housing supply situation we need to take a closer look at some related areas of development, such as the city’s population.

In Hong Kong 2030+ the government predicts the city will suffer a shortage of at least 1,200 hectares of housing development land in the long run. That estimate is based on a long-term Census and Statistics Department projection that expects Hong Kong’s population to peak at 8.22 million in 2043 and begin decreasing afterwards; while the average size of households will shrink from 3.1 to 2.7 persons per household. If Hong Kong accepts these estimates, it must be prepared to deal with two major challenges facing its long-term economic development: One is that Hong Kong may not be able to maintain an economic aggregate comparable to that of first-tier cities on the Chinese mainland or in other countries. This is because most if not all of the first-tier cities on the Chinese mainland and other countries boast a population of more than 10 million already. How can Hong Kong match them in economic aggregate if its population shrinks after peaking at 8.22 million in some 25 years’ time?

The other challenge is the age structure of its population. If Hong Kong’s population shrinks but the number of young people rises, it is still possible for the city to catch up with other major cities in terms of economic aggregate. However, the reality is Hong Kong’s population is aging irreversibly and the pace is accelerating. According to CSD calculations, Hong Kong residents aged 65 or older will account for 31 percent of the total in 2036, up from 17 percent last year, and reach 34 percent in 2046. In other words, the population is projected to shrink from 2043 on while the number of senior citizens increases. That trend will inevitably lead to a shrinking number of young people. The CSD estimates that youths aged 15 or younger will fall from 12 percent of the total population in 2016 to 10 percent in 2036 and merely 9 percent in 2043. A progressively aging population accompanied by decreasing young members means the internal driving force of Hong Kong’s economic growth will die down in a couple decades’ time, which will cause its economic aggregate to stall and very likely fall.

Obviously the scenario presented above demands immediate efforts to prevent it from becoming true. That means Hong Kong cannot afford to let its population peak at 8.22 million no matter when. The aging society may not be reversible but its youth population must grow at all costs. The “land supply debate” needs to reference the demographic structure in age groups to calculate intermediate- and long-term demands for land supply in order to identify feasible ways to maintain land supply for housing development.

The special administrative region government is responsible for not only maintaining land supply for housing development but addressing other deep-rooted structural issues as well. As far as the population is concerned, Hong Kong needs to expand beyond 10 million by increasing the number of young people as much as possible, to a ratio preferably comparable to that of big cities in neighboring Guangdong province such as Guangzhou and Shenzhen; while reducing the ratio of low-income population.

In short, Hong Kong society needs to include the population factor in its debate over land supply for housing development in the years to come, with close attention to projections in size, age structure and household income spread. These will help decision-makers formulate land supply solutions in future. It will hopefully help us find better ways to provide for senior citizens in need, among other popular concerns.

(The author is a senior research fellow of China Everbright Holdings)
(Published on Page 7, China Daily Hong Kong Edition, May 9, 2018)