SCMP Monday, September 3, 2001

Housing, a lesson in self-interest

The solution to the malaise affecting Hong Kong's economy is obvious. The salaries paid to teachers of all kinds should immediately be doubled. This would increase consumption of all kinds of commodities - there are, after all, more than 50,000 of us. It would also, in the medium term, improve the quality of local teaching, which would be better if the people doing it had faster cars, bigger flats and more overseas holidays. Travel is, after all, mind-broadening.
In the long run, the higher salaries would attract high-quality individuals into the profession, thereby laying the foundation for the skills upgrade which is the key to our city's future.
My enthusiasm for this proposal is, of course, quite unconnected with the fact that it would produce an immediate and substantial increase in my personal income. This is a serious matter. You are laughing? Then how is it that so many of us can keep a straight face when equally self-interested suggestions are made by real-estate developers?
The favourite developers' solution to all our problems is that the Government should stop producing so many subsidised flats for the needy. This would make it easier for the property potentates to make money. This is clearly in everyone's best interests, or so it seems to them. It means they will build more property, sell it at even more inflated prices, and so on in a spiral which will, in about 2050, reach the stage where a house on The Peak can be rented out to some foreigner for the gross domestic product of a small African country.
I am reminded of the debate in Britain on the repeal of the Corn Laws in 1846, provoked by the great Irish potato famine at that time. The laws protected the interests of wealthy landowners but were hated by the poor because they made the price of bread more expensive. Rarely since then have the rich been willing to argue that the interests of the poor should be so blatantly sacrificed to their own.
Oddly enough, our present constitutional arrangements make it harder to get away with this. If Hong Kong's constitution followed conventional democratic lines, the Government might be suspected of popularity-seeking, demagoguery and pandering to the uneducated desires of the mass electorate.
As we have, instead, a combination of electoral oddities, rotten boroughs and procedural eccentricities designed to give business a near-monopoly of power, the question of excessive sensitivity to popular sentiment does not arise. Instead, the Government is inevitably under the constant suspicion that it is at the beck and call of millionaires. So it has to behave itself.
Still, just in case the Government is in fact at the beck and call of millionaires, it might be worth making a few small points. The first is that Hong Kong does not suffer from an excess of housing. When did you last hear of a flat being left empty because the owner could think of no use for it and could not find a buyer?
There are, of course, plenty of empty flats about. They are being held off the market by the developers who built them, in the hope that the resulting shortage will bring higher prices. This is known as business-as-usual. When the Government produces flats in the hope of bringing lower prices, on the other hand, that is interfering with the smooth operation of the market.
There is no surplus of Home Ownership Scheme (HOS) flats. Hong Kong has more than two million public-housing dwellers who could enormously improve their living conditions by moving to an HOS flat. The only question is whether the move can be made affordable.
I was amused by the suggestion offered by an estate agent recently that the declining demand for HOS flats could be deduced from the lower amount of dealing activity at some estates. They included Sui Wo, which is just down the road from me. This is a mature estate. I remember visiting someone there in 1988, and it was not new then. It is pleasant enough. It has splendid views and a good shopping centre. On the other hand, the flats are by now quite visibly second-hand and I suppose would not attract large mortgages.
No doubt it is irritating for estate agents to find particular estates not producing the amount of buying and selling needed to sustain their industry, but I do not think elderly HOS estates are really in the same bracket as new ones.
In any case, these rather technical considerations pale beside the fundamental fact that the standard of housing in Hong Kong, taken overall, is still abysmal. And if the matter is left to the private sector, it always will be.
Many years ago, I recall seeing a video clip dating from the 1930s of Sir Julian Huxley, then director of the London Zoo, pointing out that he would rightly be accused of cruelty if he provided his animals with the sort of accommodation that Britain was then providing for most of its people.
This is the sort of comparison which can still be made here. It is still true, for example, that the Government requires you to allow more space per machine in a video arcade than it provides per person in a public-housing flat.
Hong Kong has made great strides in providing most of its population with housing which is habitable, safe and affordable. In these matters, the job is never finished, because standards rightly rise. Today's distant aspiration becomes tomorrow's basic essential.
I do not criticise the public-housing programme. It has been a well-intentioned success, and we would all be worse off without it. The fact remains that outside the ranks of the very rich, every family in Hong Kong lives in accommodation which is smaller - often much smaller - than that occupied by counterparts of similar income in comparable economies elsewhere.
There are still a great many buildings which would in more finicky circumstances be regarded as unfit for human habitation, and some of the private ones are even more crowded than the public ones. In short, there is still much to be done, and it is work of a kind for which local real-estate barons have shown little enthusiasm. The least they can do is to refrain from obstructing it.
Tim Hamlett ( ) is an associate professor in the Department of Journalism at the Baptist University.