While the opposition has long been attacking the SAR government for giving too much deference to “Beijing interference”, with one member going as far as stapling his own thighs in an attempt to prove that China is “out to get us”, there is one area where our city ought to give more room for Beijing’s wishes. That area is housing.
At the 19th Party Congress, President Xi Jinping boldly stated that “houses are built for living, not for speculation”. He also announced the introduction of new market controls aimed at curbing real estate prices. The measures would restrict sales to registered residents of the area, and prohibit the resale of property within two years of purchase. The minimum down-payment required to buy a home would also be increased.
These proposals have a direct effect on demand as they reduce the incentive for speculators to purchase property (by making it more difficult for them to earn a profit) while also stopping all sales to people who have not lived in a particular district where the property is being sold. In contrast to Hong Kong’s “vacancy tax”, which may not even be implemented due to strong opposition from developers, provincial governments on the mainland are doing much more to make housing more affordable.
Contrary to the lavish claims made by the city’s tycoons about how similar controls could lead to Armageddon, the mainland economy has fared quite well since the introduction of the cooling measures. The growth in housing sales has fallen from 14 per cent in 2017 to eight per cent this year, while the rise in prices has slowed from a high of 13 per cent in 2016 to just five per cent in March this year. Despite real estate investment accounting for 10 per cent of China’s gross domestic product, the controls have not led to any dramatic decrease in the country’s GDP growth.
As senior PwC China analyst G. Bin Zhao wrote in the SCMP, China’s macro-control policies will have the long-term effect of boosting the country’s economic prosperity by limiting the potential for “bubbles” and improving the people’s living standards through the provision of more affordable housing. Far from causing dismay, the Communist Party’s policies actually work.
Economic benefits aside, Hong Kong could gain socio-political advantages by introducing similar policies. High housing prices have always been a source of discontent for middle-class families so lower property prices would offer them some form of economic security.
Direct action targeting tycoons’ interests would also help the administration stall allegations of “government-business collusion”. At a time of political tension, Chief Executive Carrie Lam Cheng Yuet-ngor and her friends could win quite a few favours from Beijing by taking drastic action to solve the city’s housing crisis.
Hong Kong’s aversion to market controls only serves to enhance the interests of the elite. Though we take pride in having seemingly more robust institutions and regulations, there is no denying that the mainland is a step ahead in terms of implementing sensible policies. If property prices continue to rise, it won’t be long before the opposition starts wishing for more “Beijing interference”.