July 3, 2025 · 《Ming Pao》
In past articles we have repeatedly pointed out that the rupture of Hong Kong’s housing ladder is hindering social and economic development, and that housing reform is the key to the transition from governance to prosperity (由治及興). Our previous article used data to expose the severe shortage of new subsidised housing.1 This article will focus on the structural problem of insufficient turnover in the subsidised housing resale market, arguing that the Government must simultaneously significantly relax the purchase quota in the secondary market and launch a “Secondary Market Flat-for-Flat Exchange Scheme” (第二市場樓換樓) to activate both vertical (public housing → subsidised housing → private housing) and horizontal (subsidised housing to subsidised housing) mobility, helping citizens move up the housing ladder.
1. Subsidised Housing Resale Market Turnover Is Only Half That of the Private Market
There are currently more than 454,000 subsidised-sale flats across Hong Kong, but in 2024 there were only 4,435 transactions in the secondary market, a turnover rate of approximately 1%. In the same year, the volume of private secondary residential transactions exceeded 36,000 (with a total stock of around 1,665,000 flats), giving a turnover rate of 2.2% — more than double that of the subsidised housing market. Compared with the mobility levels before the property market cooling measures introduced at the end of 2010 (when the private market turnover averaged 7.1% from 2006 to 2010), the suppression of subsidised housing turnover under the current system is even more apparent.
The low turnover rate has directly given rise to a “subsidised housing non-mobility” phenomenon: the 2021 Population Census shows that only 5.8% of subsidised-housing households had moved across districts in the previous five years. Compounded by the fact that residents are forced, by the constrained turnover, to remain in the same flat for life, estates built in earlier years are facing severe population ageing.
2. Stagnation Undermines Long-term Social and Economic Development
The insufficient turnover in the subsidised housing resale market distorts five major social dimensions:
First, it shackles owners’ life choices. Because subsidised housing carries a large land-premium discount — typically more than 30% of the market price — residents cannot afford to pay the land premium to bring the flat onto the open market, and they also struggle to find buyers in the secondary market. They are therefore forced to stay in unsuitable units, such as elderly residents living in large flats and working-age residents living in remote areas.
Second, it thwarts young people’s upward mobility. Young people can hardly afford private housing, and the ballot success rate for new subsidised housing is also low (approximately 4.3% in 2023). Resale subsidised housing should be a key alternative option. The insufficient turnover effectively forces some people to wait for public rental housing or to squeeze into subdivided flats, aggravating the public housing waiting time and the problem of inadequate housing.
Third, it distorts the structure of the private housing market. Subsidised housing owners who have the means to upgrade cannot do so, and demand for private housing shrinks; young families are forced to buy “nano-flats”, and developers respond by reducing unit sizes to suit the market. As a result, living quality declines rather than improves, weakening Hong Kong’s ability to attract talent.
Fourth, it exacerbates the job–housing mismatch. The 2021 Population Census shows that the share of subsidised-housing owners who both live and work in the same district is 5.7 percentage points lower than that of private-housing owners. Cross-district commuting takes up time, crowds the transport system, and further reduces the willingness to work, harming labour market efficiency.
Fifth, it harms long-term social development. The hopelessness of home-ownership weakens citizens’ confidence in the future, delays family formation and childbearing plans, and intensifies population ageing and labour shortages — creating a vicious cycle.
3. Buying and Selling Restrictions Are Shackles on Turnover
The two main reasons for the lack of turnover in the subsidised housing resale market are as follows:
- Severe shortage of White Form quotas. The secondary market only allows resale, without payment of the land premium, to Green Form (public housing households) or White Form (eligible citizens) buyers. The Green Form has no quota cap, but the White Form requires an annual ballot under the “White Form Secondary Market Scheme” (白居二), and the quota has long been severely insufficient — since the scheme was launched in 2013, it has received an average of 81,000 applications per round. Yet the quota is only a few thousand, with an average success rate of just 6.6%, meaning that only 1 in 15 applicants is successful. The opportunity for citizens to purchase a home through this scheme is therefore extremely slim.
- Prohibition on premium-unpaid “flat-for-flat” exchanges. The current system prohibits owners from selling a flat without paying the land premium and then purchasing another subsidised flat also without paying the premium. This measure entirely cuts off horizontal mobility within subsidised housing, leaving owners unable to trade up or down in response to changes in family size (such as having children or children moving out) or to a change in workplace location.
- Expand the scope of application: The “flat-for-flat” scheme should not be confined to Hong Kong Housing Society units but should be extended to all Hong Kong Housing Authority subsidised housing units.
- Relax the conditions: Remove age restrictions; allow flat exchanges in response to changes in family structure (such as having children or children moving out) or to a change in workplace location, with no restrictions on whether the new flat is larger or smaller (for example, trading up to a larger flat to raise children, or trading down to a smaller flat after retirement). This measure can release idle space, promote job–housing balance, and further encourage childbearing and boost labour force participation.
Although the Hong Kong Housing Authority increased the quota to 6,000 under the “White Form Secondary Market Scheme 2024” (with the additional 1,500 quotas allocated entirely to young people), the number of applications was still 4.6 times oversubscribed (34,000 applications). Within six months, the transaction rate had reached 39%, and data from Midland Realty shows that subsidised-housing secondary market transaction volume in that year rose 26.6% year on year — ample evidence that demand far exceeds supply.
4. Conclusion: Rebuilding the Mobility Ladder for Settled Lives and a Prosperous Society
The shackles on subsidised-housing turnover have already caused multiple social costs. The Government must face up to the fact that increasing supply and activating the existing stock must proceed in parallel. Significantly relaxing secondary-market restrictions can both ease the shortage pressure on new subsidised housing and rebuild the “public housing → subsidised housing → private housing” mobility ladder, allowing citizens to adjust their housing in line with the stages of their lives, and truly delivering the governing vision of settled living and prosperous livelihoods. This is an indispensable part of Hong Kong’s transition “from governance to prosperity” (由治及興).
(Translation supported by AI)
Related articles:
- Will Public Housing Reform Undermine the Private Market? by Michael Wong, Alex Ngau and Yun-wing Sung
- Tenant Purchase Scheme: From Failed Lessons to Universal Sharing by Michael Wong, Alex Ngau, Yun-wing Sung
- Severe Shortage of Subsidised Housing Distorts Social Development — A Major Expansion is Needed by Michael Wong, Alex Ngau and Yun-wing Sung
