September 11, 2025 · 《Ming Pao》
Housing policy is a top priority of public policy. Beyond meeting the basic need for shelter, housing policy must also address the public’s aspiration for homeownership. As the saying goes, “A man with a permanent property has a permanent mind” — promoting homeownership not only strengthens social stability and harmony, but also encourages citizens to work diligently, accumulate wealth, and strive to move up.
Hong Kong’s housing policy has focused excessively on expanding public rental housing (PRH) in order to shorten PRH waitlists. The city has now built 850,000 PRH units — a scale unmatched by any major city worldwide — and has had some success in providing basic shelter. Yet Hong Kong’s housing policy has inadvertently caused the housing ladder to break, with the result that homeownership has not been effectively promoted. Today, only about 51% of Hong Kong residents own their homes, far below the 87% in the Mainland, 85% in Taiwan, and 90% in Singapore.
The authors have published nine articles on housing policy in this column since February this year; this tenth piece is the concluding article. Previous articles have shown that housing shortages not only affect the public’s basic shelter needs, but also drag down the socio-economy in many ways — widening the rich–poor gap, deepening social divisions, and obstructing young people from starting families and moving up. Hong Kong’s declining birth rate and ageing population have consequently worsened, with some people even reducing their work effort to meet PRH income-eligibility thresholds, further shrinking the local labour force.
The chronic mismatch between housing supply and demand has hindered Hong Kong’s ability to attract emerging industries, high-end talent, and start-up businesses, slowing economic growth, weakening competitiveness, and even threatening social stability. In addition, rising public dependence on government housing subsidies has added to the government’s fiscal burden.
1. Why the Housing Ladder Has Broken
The authors have analysed three policies in this column that have caused the housing ladder to break: first, the over-permissive “well-off” policy for PRH tenants in the past; second, the government’s lopsided emphasis on building PRH at the expense of subsidised Home Ownership Scheme (HOS) flats; and third, the overly rigid resale and rental restrictions on the Tenants Purchase Scheme (TPS) and the HOS Secondary Market — the so-called “White Form Secondary Market.”
First, the over-permissive well-off policy made it hard to push PRH tenants who had become well-off to move up to HOS flats or private housing. This was unfair to lower-income households on the PRH waiting list, and also delayed their entry into PRH (the first rung of the housing ladder), obstructing their upward mobility. Fortunately, the authorities tightened the well-off PRH policy earlier, easing this contradiction.
Second, the government’s lopsided emphasis on building PRH at the expense of HOS has produced an HOS shortage far more severe than the PRH shortage. Over the ten years from 2014 to 2024, the average wait time for green-form HOS applicants was 12 years, while white-form HOS applicants waited an average of 64 years. The result is that large numbers of residents who can afford HOS flats but cannot afford private housing are unable to move up through HOS purchase; instead, they join the PRH queue — and to qualify, they reduce their work effort, artificially generating demand for PRH.
The younger generation is the backbone of Hong Kong’s future, yet they are generally neither owners nor PRH tenants, making them the biggest victims of the housing shortage. The share of young Hong Kong owners under 35 fell sharply from 22.1% in 1997 to 7.6% in 2019. The share of highly educated young PRH applicants is also rising: among those under 30 with post-secondary education or above, the proportion rose from about 10% in 2004 to 67% in 2014 and 79% in 2024. This signals that a large number of highly educated young people plan to depend on government subsidies, and that the labour market is losing many young, educated, and highly productive workers. Sadly, many Hong Kong young people have given up striving to move up, treating “getting PRH” as their life goal.
Hong Kong’s current housing policy is plainly self-contradictory: on the one hand, the government has caused HOS and private housing to be in chronic short supply, pushing private rents sharply higher and ultimately driving large numbers of residents to depend on PRH subsidies; on the other hand, to shorten PRH wait times, the government keeps building more PRH, locking itself into a vicious cycle that greatly increases the fiscal burden. The construction cost of each PRH unit has now risen to HK$970,000, but PRH rent can barely cover rapidly rising maintenance costs, let alone recoup construction costs. By contrast, building more HOS flats can generate substantial revenue, effectively easing the government’s massive deficit.
2. Rigid Resale and Rental Restrictions on Subsidised Housing
Finally, even those lucky enough to win an HOS ballot and purchase a flat still face the shackles of insufficient liquidity in the HOS Secondary Market. Because the HOS land-premium discount is steep, residents generally cannot afford to pay off the premium, so HOS resale relies on the “White Form Secondary Market” — where flats with unpaid premium can be resold to white-form buyers who meet HOS eligibility. However, the White Form Secondary Market imposes excessively stringent restrictions on both buyers and sellers, resulting in severely thin liquidity.
The number of white-form buyers is subject to a quota, and the quota is far too small, making it hard for residents to be drawn into the market. On the seller side, owners of unpaid-premium flats cannot trade up by “flat-for-flat”: after selling a unit, the owner cannot purchase another subsidised flat with unpaid premium.
These restrictions obstruct both vertical mobility (PRH → HOS → private housing) and horizontal mobility (HOS-to-HOS trade-ups). As a result, owners are forced to stay in unsuitable units, finding it hard to trade up and move up, and unable to use “flat-for-flat” trade to adapt to changes in work or family circumstances — for example, the elderly living in large units, or working people living in remote areas. It also makes it harder to leave Hong Kong for work or to retire on the Mainland.
The authors have proposed in this column that, in addition to significantly expanding HOS supply and launching an enhanced TPS, the government must also activate liquidity in the White Form Secondary Market. Specific recommendations include raising the White Form Secondary Market purchase quota substantially, and at the same time allowing owners of unpaid-premium flats to “trade flats.”
3. A Functioning Housing Ladder: The Singapore Model
Singapore’s public housing policy is highly successful and is a global model. The city-state’s public rental housing targets the small number of poor families with no other housing options (including families with monthly income below S$1,500, about HK$9,100); tenancies typically run for three years, and although renewals can be applied for, those who no longer qualify must move out and are required to rent or buy a flat on the open market.
Singapore’s public housing model centres on encouraging homeownership rather than providing rental housing, and pushes tenants in public rental housing to move up to build-to-order (BTO) flats as quickly as possible. The result: more than 80% of the population has bought a government-built HDB flat, enjoying living conditions far superior to those of Hong Kong residents. HDB resale restrictions are fairly relaxed — after five years of occupancy, flats can be resold to Singapore citizens or permanent residents, facilitating both vertical and horizontal mobility.
By contrast, Hong Kong’s public housing model emphasises rental housing rather than homeownership, trapping large numbers of residents in PRH (the bottom rung of the housing ladder) and making it hard for them to move up. As for the lucky few who win HOS ballots, they too face stringent resale and rental restrictions that obstruct their vertical and horizontal mobility — not only greatly diminishing their welfare but also seriously impairing the economy’s overall competitiveness and dynamism.
Hong Kong needs to emulate the Singapore model. Public housing policy should aim primarily to encourage homeownership rather than provide rental housing, gradually raise the share of HOS within public housing, and significantly relax resale and rental restrictions in the White Form Secondary Market.
4. A Functioning Housing Ladder Benefits Private Market Development
Today, with Hong Kong’s housing ladder broken, large numbers of residents are trapped in PRH and cannot move up to buy HOS; HOS owners, in turn, find it hard to sell and trade up to private housing. The result is that, among young people, only those with family wealth can typically get on the property ladder; the pool of young buyers in the private market is narrow, severely harming its long-term development.
Furthermore, severe resource misallocation exists in Hong Kong’s public housing stock. Housing reform can unlock latent property value, thereby increasing social wealth and aggregate demand, including demand for housing units. Finally, reforming Hong Kong’s rigid public housing system, which damages overall economic competitiveness, will stimulate local economic growth and hence boost demand for private housing.
5. Strategic Coordination of Housing, Land, Population and Economic Development
The government has actively attracted talent in recent years, leading to population growth and a rapid rise in private rents, now close to historical highs. The authorities need to coordinate housing and population policies, and actively balance housing supply and demand.
To ensure long-term and strategic coordination of land supply, population, immigration policy, and economic development, the authors propose that the government set up a cross-bureau working group led by senior officials, bringing together the Housing Bureau, the Labour and Welfare Bureau, and the Commerce and Economic Development Bureau to formulate a macro and long-term population and economic development strategy. On that basis, the government should replan land supply and housing policy, anchoring urban planning to the future economic development strategy and ensuring the market has sufficient housing of all types.
Hong Kong’s economy is currently weak, post-pandemic recovery has fallen short of expectations, and the government is mired in fiscal deficit. Yet an economic crisis is precisely the right moment for comprehensive housing reform. Housing policy should be repositioned: it should not only centre on poverty alleviation, but also actively build a society in which everyone — especially young people — has the chance to become a homeowner. Promoting homeownership, rebuilding the housing ladder, and encouraging young people to move up will not only solve Hong Kong’s housing problems, but also make better use of overall social resources, strengthen competitiveness, and stimulate economic growth. Only by doing so can Hong Kong break out of population ageing and social stagnation, and move towards a more sustainable and hopeful future.
(Translation supported by AI)
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