A Brief History of Hong Kong’s Housing Crisis
Updated: Oct 10, 2021
1975 view of Shek Kip Mae Estate from Who Chai Street to the north
The housing crisis is an important topic to reflect upon. Said topic is one of the most alarming problems in Hong Kong. Ironically Hong Kong citizens know little about how the housing crisis came to be.
In 1953, a fire swept through Shek Kip Mae, leaving over 50,000 people homeless, as their homes were demolished. As a result, the Hong Kong government requested the Public Works Department to construct shelters for those who lost their homes, and the Public Works Department had two-story bungalows built. However, this was only a temporary solution, as there would be no doubt that Hong Kong’s population would gradually skyrocket, and soon building space in Hong Kong would be limited. In an attempt to find a permanent solution to this housing crisis, Hong Kong’s first public housing system was implemented by the Provisional Resettlement Department during that same year. These 8-storey apartments were equipped with newly-built public facilities and were connected to shopping malls and sports facilities near the city centre. This year marked the beginning of a housing crisis that is still ongoing.
In 1972, the government announced a Ten-year Housing Programme which targeted to provide self-contained accommodation for 1.8 million people between 1973 and 1982. In 1973, the government decided to reorganize the original housing bodies which led to the Housing Authority (HA) being established. The HA was able to successfully take forward the government’s public housing programme. By 1981, the number of people living on the HA's public housing estates reached two million. It was seen as a great success, but the problem still remained. In 1976, the government created the Home Ownership Scheme (HOS). This scheme enabled lower middle income families and public rental housing tenants to acquire their own homes. Along with several other schemes, such as the Private Sector Participation Scheme (PSPS) and different loan schemes. By 1982, it is estimated that all the mentioned efforts were able to give 3 million citizens a place to call home. On top of that, the government announced a 5 year extension on the Ten-Year Housing Programme. To ensure the housing was going to people who needed it, the Housing Subsidy Policy was adopted to reduce housing subsidy to better-off tenants.
Throughout the 1980’s, rent prices grew increasingly expensive making home ownership more desirable. However, due to the sudden illegal immigration of 23,000 people from Mainland China in 1978 to 1980, the demand for housing rose. Thus, the expenditure on housing followed suit. During the 80’s, a new town now famously known as Tian Shui Wai was developed. Public housing accounts for more than 70% of the 406 hectares that is Tian Shui Wai. The area can house around 306,000 people.
In the middle of the 1990’s, Tung Chee-hwa proposed an ambitious plan to develop 85,000 apartments per year to reduce the time needed to wait for public housing down to 4 years. Unfortunately, this plan was halted due to a new crisis in 1997-The Asian Financial Crisis. This took a major toll on Hong Kong’s real estate. “A few months after the project’s launch, the 1997 Asian financial crisis arrived on Hong Kong’s shores, causing a 70 per cent collapse in home prices and driving an estimated 100,000 home owners into negative equity. Therefore, many homeowners are not willing to sell, ultimately decreasing the supply of housing in Hong Kong. Evidently, a study conducted after the Asian Financial Crisis states that the demand for housing was 70.8 times more than the supply of housing during that period. It would take six years for the market to crawl out of the slump.” says an excerpt from the South China Morning Post highlighting the major disruption caused by the financial crisis.
On a brighter note, the first batch of housing explicitly for senior citizens was introduced. Hong Kong's elderly are not only the poorest people in the city, but the developed world. Close to a third of people aged 65 and over are classified as poor, according to calculations released by the Hong Kong Council of Social Service.
Due to the financial crisis, 23,000 domestic workers from the Philippines came to Hong Kong, and also 440,000 illegal immigrants crossed the border from Mainland China. This caused an even higher demand for housing which was difficult to fulfil due to the financial crisis.
4 years after the Asian Financial Crisis, Hong Kong was hit with the SARS epidemic. A South China Morning Post article states “When looking at the situation purely from an investment perspective, drops in property market prices are contributing to something of a silver lining for potential buyers.” Housing prices dropped directly because of the epidemic. While this was good for homebuyers, property sellers were unable to make money off their assets which caused devastation in the economy.
Throughout the years, Hong Kong has faced many challenges regarding the housing crisis and has confronted these issues with different schemes and plans. Unfortunately, the housing crisis seems to be never ending and only grows more severe as time passes. The best we can do is look back at how it started and learn from our past to prepare for the future.