The protests in Hong Kong, entering their 16th week, are “the culmination of many decades of neglect” by the government on unaffordable houses and resulting polarization, the South China Morning Post (SCMP) analyzed Monday. The newspaper said that the authorities’ sale of public land to developers has restricted the supply of properties, prompting public dissatisfaction.
The median income of workers in Hong Kong currently stands at 343,000 Hong Kong dollars (about 52,300,000 won) and the average price of a house is 7.169 million Hong Kong dollars (about 1.93 billion won). A median income is the amount obtained by dividing the total income of a group by the number of units in that group. According to SCMP, a study by Demographia revealed that “the average Hong Kong household needs 20.9 years of income, without spending anything on food, education, travel or leisure, to afford a flat.”
The problem is deeply related to the authorities’ tax policies. “British administrators created a low-tax system for the former colony” and “on the basis of low personal income and corporate taxes, with no value-added tax or import duties,” Hong Kong could quickly grow to a global finance hub. Still, the government had to sell public land at low prices to make up for the shortage of finances, and this only benefited a few number of property developers who built luxury apartments. “The cost of land makes up between 60 percent and 70 percent of the total cost of a typical residential property project in Hong Kong, more than double the 20 percent to 30 percent range seen outside the city,” SCMP quoted an expert as saying.
Some call for the “Lands Resumption Ordinance” through which the government takes some of the privately-owned land or even the “vacancy tax.” Yet, many remain skeptical about whether such measures could be enforced in the city where “land premiums and stamp duties, considered non-stable tax revenue, are projected to make up 33 percent, or more than 197 billion Hong Kong dollars” (about 30 trillion won). “If we do not have new sources of stable income, the high land price policy will not change,” said Moses Cheng Mo-chi, chairman of the Insurance Authority.