Northern Metropolis Must Not Repeat Tin Shui Wai’s Mistakes: Public Housing Must Shift from “Rental” to “Homeownership”

Over the past year, the SAR Government’s pace of reform on land and planning has arguably been the most breakthrough since the handover. The ‘Northern Metropolis Steering Committee’, personally chaired by the Chief Executive, has three working groups underneath, targeting the completion of dedicated legislation by 2026; the new land tendering model has compressed developers’ bidding costs and construction timelines; the bureau-level escalation mechanism has also helped break down cross-departmental bottlenecks. This series of reforms has substantially lowered the supply-side barriers that have long plagued Hong Kong — ‘hard to make land, long approvals, high costs’ — and the direction absolutely deserves recognition.

Yet the market response has been unenthusiastic. Commercial land, due to oversupply and high vacancy rates, has seen its auction suspended for three consecutive fiscal years; land sales revenue as a share of government fiscal revenue has fallen from approximately 27% in FY2017/18 to about 2.4% in FY2025/26. Total investment in the Northern Metropolis plan is estimated at around HK$3 trillion, of which the government is to bear about HK$1 trillion and the private sector needs to put in roughly HK$2 trillion. Under the dual pressures of fiscal deficits and weak private investment appetite, if the demand side fails to start up in tandem, the Northern Metropolis will fall into a predicament of ‘the government building the city alone while the market stays absent’, and developers and the MTR Corporation will find it hard to bear project risks.

In a word: once the land is made, it does not mean people will come.

2. Lessons from Tin Shui Wai: The Chicken-and-Egg Problem

Any new-town development faces the same ‘chicken or egg’ dilemma: a quality population attracts quality amenities, and quality amenities in turn attract a quality population. If the residents who move in initially skew toward the low-income end, the quality of amenities is hard to upgrade, and a low-level equilibrium ultimately takes hold.

Tin Shui Wai is the most painful lesson of this trap. The new town was planned in the 1980s and saw large-scale occupation from the 1990s; its population grew from about 15,000 in 1992 to about 200,000 in 2002. Due to an over-concentration of public rental housing, a scarcity of employment opportunities, and a chronic lag in commercial and educational amenities, the district was once labelled by public discourse as a ‘city of sorrow’. Social problems, family tragedies, and the difficulty of upward mobility for young people accumulated for over a decade, and have yet to fully dissipate.

But one point must be clarified: the problem is not ‘too much public housing’, but rather that the composition of public housing is dominated by ‘rental public housing’. Rental public housing requires strict income and asset tests, and by its institutional design must serve primarily low-income and welfare-dependent families. This is fundamentally different in nature from ‘subsidised sale housing’ (HOS, GSH, Starter Homes, etc.), which targets middle-class families buying their own homes. In other words, public housing itself is not the problem; the mistake is putting all the eggs in the same basket.

According to public government data, all new residential supply in Hong Kong has been planned at a public-to-private ratio of 70:30 since 2018; over the next five years, the Northern Metropolis will shoulder about 40% of the city’s public housing supply. The public-private ratio is about 67:33 in the Kwu Tung North / Fanling North New Development Area, and about 50:50 in Hung Shui Kiu / Ha Tsuen. Within public housing, the government has already proposed adjusting the ratio of rental PRH (including GSH) to other subsidised-sale flats from 70:30 to 60:40 — the direction is right, but the push still falls short. Under the current plan, the Northern Metropolis will see a large concentration of rental PRH, a considerable portion of which are sub-300-sqft small units, combined with inadequate amenities — almost a repetition of the Tin Shui Wai missteps.

3. Core Recommendation: Make Subsidised Homeownership the Centrepiece — Build a Northern Metropolis Pathway for Young Homebuyers, from ‘Rent’ to ‘Buy’

We firmly support building public housing in the Northern Metropolis — it is not just a tool for basic residential security, but also the key to forming a stable middle-class community in the new town, strengthening public confidence in the Northern Metropolis, and preventing excessive polarisation between rich and poor. However, the problem with Northern Metropolis public housing has never been just about ‘quantity’, but about ‘quality’ and ‘type’. To this end, we offer the following recommendations from both the supply and demand sides of housing:

(1) Housing Supply Composition

First, building on the government-announced ‘rental PRH / other subsidised-sale = 60:40’ ratio, further adjust the internal ratio of Northern Metropolis public housing to 40:60, or even 30:70, so that subsidised homeownership becomes the mainstay of Northern Metropolis public housing.

Second, earmark no less than 30% of the quota in Northern Metropolis subsidised-sale flats for young family buyers under 40, providing young couples with a stable subsidised-homeownership opportunity.

Third, pilot a ‘Build-to-Order’ (BTO) construction model in the Northern Metropolis: the Housing Authority first takes applications, and only when demand reaches a sufficient scale does construction begin. This would more precisely respond to the homeownership needs of young families, and gradually correct the current structural imbalance where the completion volume of PRH far exceeds that of HOS.

(2) Housing Demand Composition

Without a response to the demand side, adjustments on the supply side will have very limited effect. The age structure of a new town’s early residents often determines its long-term trajectory within a decade. Over the past eleven years, Hong Kong’s population aged 20–39 (excluding foreign domestic helpers) has declined by a net of about 270,000. A 2024 Chinese University survey also showed that about one-third of respondents said they ‘would emigrate if they could’. Although the Top Talent Pass Scheme and other talent-attraction programmes have brought in about 500,000 top talents and their families over three years, they generally tend to rent rather than buy, and have not formed a stable, rooted population or tax base. If local young people cannot see a clear path to ‘owning their first home in the Northern Metropolis’, the Northern Metropolis’s population engine will struggle to truly start up.

First, align the down payment threshold for White Form young buyers in designated primary subsidised-sale projects in the Northern Metropolis with that of current Green Form buyers. Specifically, the government could extend the 95%-mortgage-insurance arrangement to White Form applicants aged 18–39 for Northern Metropolis subsidised housing. The institutional logic is ‘value for value’: Green Form buyers exchange their returned PRH flats for a lower down-payment threshold; Northern Metropolis White Form young people, in turn, exchange their commitment to settle in the Northern Metropolis and support the new development area’s growth for the same homeownership terms. This adjustment requires no new fiscal allocation, and the risk can be borne by the Housing Authority and the Hong Kong Mortgage Corporation under existing frameworks. HOS flats themselves already carry a discount of about 30–40%, providing sufficient buffer — a nominal 95% mortgage is not equivalent to a high-risk mortgage in the private market.

Second, in the ballot mechanism, add extra weighting to applicants who are ‘young married couples’ and who ‘choose Northern Metropolis projects’, in order to raise their chance of being drawn. This will complement the lower down-payment threshold: weighted lotteries make it more likely that target applicants ‘get drawn’, and the 95% mortgage arrangement then lets them ‘afford it’ after being drawn. The two together can truly convert latent homeownership intent into actual decisions to settle in the Northern Metropolis.

On the whole, this package of policies can preserve the social function of public housing while guiding the Northern Metropolis’s population structure, from both supply and demand ends, towards a middle-class-family-dominated composition, fundamentally avoiding a repeat of the ‘Tin Shui Wai-style’ low-level equilibrium, and translating public housing investment into higher land values and stronger community cohesion.

In short, public housing must still be built, but what matters more is letting more young people see a clear and credible path — through their own efforts, to get on the housing ladder, put down roots in the Northern Metropolis, and build a long-term future in Hong Kong.

4. Don’t Let the Next Generation Foot the Bill

Returning to the key question Secretary Winnie Ho was asked: how to prevent the Northern Metropolis from becoming a ‘dormitory town’? The answer lies not in more slogans, but in a more precise population structure. The supply side has ‘broken through the wall’; the next real test is on the demand side. If we push ahead with the current plan as is, the Northern Metropolis is very likely to become a replica of multiple ‘Tin Shui Wais’ — causing irreversible damage to Hong Kong, to the Greater Bay Area, and to the exemplary significance of the country’s ‘One Country, Two Systems’.

But as long as we dare to make the structural shift in public housing from ‘rent’ to ‘buy’, and dare to place young people’s homeownership at the core of policy, the Northern Metropolis can fully become a genuine starting point for the next generation of Hong Kong people to settle down and put down roots in the Bay Area. In the next article, we will further discuss why, in spatial planning and university-town expansion, Hung Shui Kiu and Nga Tam Mei are the last ‘malleable window’.

(Translation supported by AI)

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