Hong Kong’s housing market has lost nearly a third of its value since 2021, a dramatic correction that’s triggered public concern and policy debate. Home prices are down about 30% from their peak, a decline driven largely by higher interest rates that have made borrowing more expensive and homeownership even harder to attain. With further price declines expected, some argue that the government should suspend or scale back land sales to avoid worsening the slump. But this argument misses the forest for the trees.
Even after a 30% drop, Hong Kong remains one of the world’s least affordable housing markets. By one measure, the median income earner would still need 29 years of earnings to buy a typical home. That’s an improvement from the price-to-income ratio of 40 in 2021, but it’s still worse than in London (19), Tokyo (16), New York (14), and even Singapore (23).
In that context, halting land supply might serve short-term market stabilization goals—but at the cost of deepening the structural housing deficit. The better move is to use this moment of price relief to double down on housing supply, especially affordable and middle-income units.
Price drops may dominate headlines, but affordability is a deeper issue.
For most Hong Kongers, the dream of owning a home remains remote. Even with lower sticker prices, rising interest rates and tighter lending standards have kept monthly mortgage burdens high. For example, a HK$7 million flat now may cost less upfront than in 2021—but higher borrowing costs mean the monthly payments are roughly the same or even higher.
That’s why the price-to-income ratio remains such a crucial metric. Despite the drop from 40 to 29, it’s still out of sync with global norms and local earning power. It reflects not just high prices, but stagnant wage growth and limited housing options across income bands.
Pausing land sales might slow further price declines, but it would do nothing to fix affordability. In fact, by choking future supply, it could eventually push prices right back up, once pent-up demand reenters the market. The real issue isn’t that homes are too cheap—it’s that supply is too constrained and product diversity is too narrow.
Land sales are a core mechanism of housing policy in Hong Kong. They’re not just about raising government revenue—they signal long-term supply pipelines to developers, investors, and residents. When these are paused or slowed arbitrarily, it creates policy uncertainty that feeds market speculation. More than that, it disrupts planning. Developers don’t launch new projects without clear timelines on land availability. Construction slows. And housing delivery drops. This hurts first-time buyers, families, and even rental tenants, because it limits the range of units that make it to market.
Consistency in land sales—even in a weak market—offers something else: credibility. It tells the public that the government is serious about structural reform and not beholden to short-term price signals. That consistency is crucial if Hong Kong hopes to one day decouple property from politics. There's precedent to follow. During the early 2000s downturn, the Hong Kong government halted land sales to support prices. That decision arguably laid the foundation for the hyper-financialization of housing that followed—where property became less about living and more about investing. Hong Kong shouldn’t repeat that error.
Slowing or suspending land sales now would have several knock-on effects:
- Developers will hoard land, delaying construction until prices recover. That worsens today’s supply crunch tomorrow.
- Speculators may return, anticipating artificial scarcity, which will drive up land values and resale prices.
- New project launches shrink, reducing not just quantity but product variety—hurting first-time buyers the most.
- Public confidence declines, as people see housing policy responding to market noise rather than needs.
In effect, it turns a short-term correction into a longer-term crisis. And the housing market, especially in a city with such tight land constraints, doesn’t self-correct easily. The better path is to expand supply counter-cyclically. Use the downturn to diversify housing formats—co-living units, rental apartments, and starter flats for singles or small families. In doing so, Hong Kong can insulate its future from the boom-bust cycles of the past.
To put Hong Kong’s situation in context, look at cities that have taken proactive, long-term approaches to affordability.
Singapore, for example, runs a robust pipeline of public housing that buffers the private market from volatility. Its price-to-income ratio of 23—while still high—is substantially more manageable than Hong Kong’s. And unlike Hong Kong, where land scarcity is often blamed, Singapore’s limited geography has not stopped it from supplying new housing consistently.
Tokyo is another standout. By easing zoning restrictions and encouraging high-density development near transit, the city has kept prices relatively stable over the long term—even with strong population growth. Tokyo’s ratio of 16 years of income per home shows how regulatory flexibility can yield real affordability.
Both cities show that land supply alone isn't enough. But it’s a foundation. Without consistent land release, no housing policy—no matter how innovative—can fix affordability at scale.
Ironically, this market downturn may be the best chance Hong Kong has had in years to rethink its housing strategy. Falling prices reduce political resistance to change. Land values are lower, which means future developments can be more cost-effective. And with fewer speculators active, the government has space to implement long-term reforms without facing immediate backlash.
This could include:
- Zoning reform to encourage mixed-use and higher-density builds
- Converting underused industrial or government land for residential use
- Incentives for affordable housing developers and NGOs
- Tighter oversight on land hoarding and project delays
These steps require policy courage. But they could move Hong Kong from a reactive stance—trying to manage volatility—to a proactive one, focused on equity and livability.
Hong Kong should not stop or slow land sales. The argument for doing so is rooted in old instincts: protect asset values at all costs, even if it means perpetuating scarcity. But that mindset has produced one of the least affordable housing markets on Earth, even after a 30% price drop.
Instead, the government should use this moment to build toward the future. Expand supply. Diversify product offerings. Push for housing as a public good, not just a financial asset. In doing so, it will begin to correct a system that, for too long, has prioritized capital preservation over quality of life. A home should be a place to live—not a lottery ticket. The sooner policy reflects that, the better off Hong Kong will be.
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