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Part III: Long Term Housing Strategy

14. Against a dire supply outlook, the Government, on the other hand, has grossly underestimated Hong
Kong’s future housing demand. The forecasted rate of household formation is the main component
in the LTHS’s demand projection. It is, in particular, unreasonably low due to a problematic
methodology.
15. Between 2006 and 2016, while only 126,000 new private housing units were completed, there was
an increase of 511,000 people living in private flats in the same period. As a result, the average
number of persons per private rental unit rose from 2.64 persons in 2006 to 3.07 in 2016 by an
overwhelming 16%. These figures point to the harsh reality of how a lot of multigenerational families
are forced to squeeze into tiny flats in Hong Kong, causing the number of residents per private unit
to rise significantly. The implication is that, the Government will continue to underestimate the city’s
real housing needs if it keeps on relying on past trends to forecast future demand.

16. The current practice of household projection feeds into a vicious cycle of downward revision. The
cycle begins when the low housing completion provides few opportunities for people to move out
to new homes. As such, it causes the average number of persons per flat to artificially increase,
which in turn suppresses the household formation figure. Consequently, both the demand forecast
and supply target for housing will be reduced. The low supply target would eventually result in low
completion, setting off the same cycle repeatedly again.
17. It is estimated that the housing supply target forecasted by the LTHS will continue to drop in the
near future, if the current methodology remains unchanged. As a result, it would misguide the
Government’s efforts in increasing land supply. In addition, the LTHS also neglects past shortfall. In
rolling over its ten-year supply target, the new target each year will not make up for housing failed to
be delivered in the preceding years.
18. We wish to emphasise that the housing crisis will persist if the actual housing demand continues
to be underestimated. The current methodology adopted by the LTHS to project its housing supply
target has not fully considered the current and past shortfalls and is likely to underestimate future
demand. Therefore, we would call for the LTHS Steering Committee to reconvene and review the
methodology used.

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