HOUSING IS NOT A SPECULATIVE COMMODITY

31/10/2017

Image: BWPI

​barryshares 

"Houses are for living in, not for speculation" was President Xi’s renewed clarion call that at the 19th Party Congress. Yet in Hong Kong, home ownership is seen as the be all and end all of life and to many the very means of wealth creation itself. 

President Xi delivers his speech at the Central Economic Work Conference. (image: news.xinhuanet.com)

This announcement at the 19th Party Congress that "Houses are for living in, not for speculation” by President Xi was first released in the Central Economic Work Conference of December 14th, 2016. It followed the continued tightening of housing measures across China since March this year, when Xiamen became the first city nationwide to introduce a sales ban. More than 40 cities have now followed suit, with Xi'an, Chongqing, Nanchang, Nanning, Changsha, Guiyang, Shijiazhuang and Wuhan have recently tightened housing controls, with most banning home sales within two to three years after purchase. Since July, the Ministry of Housing and Construction has conducted housing rental trials in 12 cities including Guangzhou, Shenzhen, Nanjing, Hangzhou and Xiamen.

Carrie Lam unveiled a slew of housing relief measures for the city of 7.3 million people to stay competitive (image: The Straits Times)

In her first policy address, Chief Executive Carrie Lam focused on the Hong Kong housing crisis and suggested that extending homeownership was going to be at the core of policy whilst “housing is not a simple commodity”. Lam pointed out that “Our community has a rightful expectation towards the Government to provide adequate housing. This is also fundamental to social harmony and stability”. This seems to just about tow-the-line of Beijing, where President Xi highlighted that authorities should put in place a housing system that ensures supply through multiple sources, provides housing support through multiple channels, and encourages both housing rental and purchase. 

image: ourhkfoundation.org.hk

Last week I attended the release event of the latest policy research document from the influential Our Hong Kong Foundation; “Housing Policy Reform to narrow Wealth Gap”. The Report is a detailed critique of imbalances in the government’s social housing position by an eminent political economist from the University of Hong Kong. It proposed a new and elaborate scheme to improve efficiencies in the housing market but more importantly the overarching scope is to “inject wealth to households through the form of homeownership, encouraging households to satisfy their housing demand through the private market”. 

In other words, it means treating housing absolutely as a commodity and the main driver of wealth creation, not as a basic human need. This is of course the same private housing market that has stretched the wealth gap to the ridiculous current situation of unaffordability and now treats housing as a playground for fast-buck, labour-free rewards, similar to the stock market, race track and gambling hall. It’s the same market that China is heavily suppressing in order to mitigate property wealth accumulation.

According to the Paris-based Organisation for Economic Co-operation and Development, house prices increased by an average of 83% between 1970 and 2008 in OECD countries. In Germany, they fell 17%. (image: idolza.com)

Does this kind of thinking, using housing specifically as a commodity, not follow so much that is wrong about the priorities of Hong Kong, where pure wealth creation is considered more important than quality of life issues? Why do people feel the need for homeownership? Current financial considerations may seem the main reason but studies show people associate homeownership with putting down roots, starting a family and gaining a measure of security and control over the place in which they live. In other words, they want to feel like citizens, with a stake in their society.

Despite an increase of 95,000 PRH units, the number of PRH residents has actually dropped slightly by 4,000 over the period. (image: ourhkfoundation)

​There is also evidence of a remarkable connection between home ownership and the cultivation of strong communities where owning a home significantly increases a person's sense of belonging to their neighbourhood. Young people who want to own, but don't yet do so, talk about not really seeing the point of committing to the area in which they are living or getting to know the people with whom they share a street or building. These are the things that make a vital difference to whether we build a common life together, or simply exist in a series of separate worlds.
​
As such, home ownership is tremendously valuable as a social tool, however such studies reinforce the concept that housing “is for living in and not speculation”. If our citizens feel they need to own a house primarily as the means to survive economically then something is very wrong, and ownership can also be a financial albatross in a depressed sales market or when there are rising interest rates. 

Mixed income housing at East Village Austin Texas. (image: Bercy Chen Studio)

It also makes me consider that though the provision of quality rental housing, balanced landlord / tenant rights and well considered urban design, vibrant, safe and secure communities can also be built without the requirement of home ownership. Creating communities where non-owners are still able to be stakeholders and take pride in their community may become more of an aspirational housing approach than that of simply creating ownership. 

We are about to see a plethora of new global models for home part purchase or fractional home purchase. Hybrid homeownership and land rental models are arising through ‘resident owned communities’ and co-operatives with flexibility for owners to share management and control of parking, managing infrastructure, operations, and common areas. 

Alipay users with 650 credit points can enjoy no-deposit housing rental privileges. (image:techweb)

The city of Beijing has recently unveiled a scheme to introduce homes with property rights to be shared by the government and buyers. According to a document issued by the city's housing authorities, individual buyers will be able to buy a share in such homes and still have the full right of use. It appears similar to the Shared Ownership Schemes of the Western Australia Government.

Alipay, Alibaba's third-party online payment platform, has launched a credit database for all rental homes, tenants and landlords registered with the Alipay platform whilst market disruptor Airbnb has developed a new platform to provide mortgage deposits in exchange for rental access. 

230-square-foot Modern Tiny Smart Home, complete with high-tech features including lights, locks, and window tinting all controlled by a mobile phone app. (image: tinyliving.com)

Given that we won't be able to increase home ownership overnight, we should aim to increase quality, stability and control in the rental sector, both public and private. This will mean developing tenure that offers greater security and perhaps also the chance to take steps towards ownership. And we need more and much better quality public housing too. 

​A worldwide housing revolution appears about to break, with micro, mobile and temporary manufactured housing appealing to the younger generation. A more visionary approach to what is really important in housing is essential. Building more home ownership may seem economically vital, however it’s more the quality of the living community that makes the real difference to the sort of society we build together.

2017/08/29
Take an Alternative Hong Kong Architecture Tour #3

​2017/06/27
Towards A New Urban Solution

2017/05/23
Agricultural Revolution Awaits

2017/04/24
Simple Solar Tech Generates New Lives

Wechat