They shared the three-bedroom flat with her husband’s younger sister and parents. The siblings had previously lived with their parents in a public rental flat which was slated for redevelopment.

But, her husband and sister-in-law paid for the flat, sharing equally to shell out HK$2.35 million over 22 years.

In 2008, the couple paid HK$2.1 million for a second home, a 505 sq ft flat in the same estate, for themselves and their two children. Having benefited from the subsidised scheme once, they had to pay the full market premium for the second-hand property.

“If we had not bought it, there would have been no more chance later as homes only got more and more expensive in Hong Kong,” she said. “Our next generation is not as lucky.”

Crisis grew from years of lethargy

Early in his term of office, Hong Kong’s first leader after the handover, Tung Chee-hwa, declared an ambitious housing target to build 85,000 flats a year and boost the home ownership rate from 46.7 per cent in 1997 to 70 per cent.

But the Asian Financial Crisis hit Hong Kong soon after, rocking the property market and sending prices plunging by 57 per cent between 1997 and 2002.

Tung quietly called off his housing programme, and was forced in 2002 to halt all housing and land supply measures, including land sales to private developers and building new towns. The inaction persisted long after Tung resigned in 2005, midway through his second term.

It was not until 2011 that his successor, Donald Tsang Yam-kuen, began reviving the Home Ownership Scheme and other land-supply measures, but by then, the years of policy paralysis had set Hong Kong on its way to an entrenched housing crisis.

Young Hongkongers turn to Greater Bay Area to afford homes

The multifaceted housing problem only worsened in the years that followed.

Today, low-income families hoping for public rental housing face an average wait of 6.1 years, a 24-year high. Meanwhile, more than 220,000 of Hong Kong’s poorest residents are stuck in notorious tiny “cage homes” or subdivided flats.

For the slightly better off and middle-class, both subsidised and private home prices have shot up while the size of flats has shrunk. So-called “nano flats” as small as 128 sq ft – barely bigger than a parking space – have sprung up in the private sector over the past decade.

A 590 sq ft subsidised flat like the one But and her husband bought in 1997 is not only rare to find in new projects from recent years, but at current prices, would cost between HK$3.5 million and HK$4.89 million depending on location.

A young working couple with a similar background would find it much harder to buy a home of their own today in the world’s most expensive property market.

Homes have shrunk, but cost much more

IT project manager Rizzo Chow Yan-hung, 31, hopes to get married within the next two years but not unless she and her boyfriend, 36, can buy a home.

She has lived alone since 18 in a 180 sq ft public housing flat in Wong Tai Sin, arranged for her by social workers when she had family problems. The rent is only HK$1,000, but she will have to move out if she gets married, because the couple’s combined income would exceed the threshold for tenants.

Chow earns HK$23,000 a month, while her boyfriend makes HK$29,000 as an IT user experience designer. They are trying their luck in the subsidised home market.

She will be happy with one of the 280 sq ft to 457 sq ft flats in a new Home Ownership Scheme project in North Point, going for between HK$2.48 million and HK$5.31 million.

If they succeed, she said, it would be like winning the lottery.

“Subsidised flats are definitely cheaper than those on the private market but that doesn’t mean they’re inexpensive. But at least the money will go towards my own home rather than into the pocket of my landlord,” Chow said.

She knows her chances of getting a flat are slim as the scheme was oversubscribed 28 times, and she was one of 251,000 applicants for 8,926 flats.

In 1997, But and her husband succeeded when there were 8.5 applicants for every flat.

Unlike But, who shared her first home with her in-laws, Chow said her generation preferred to have their own space.

Home Ownership Scheme flats have been shrinking in recent years. Almost a third of this year’s 8,926 flats are smaller than 322 sq ft – with the smallest only 186 sq ft. Such small flats made up only 22 per cent of those sold in 2020 and 15 per cent in 2019.

Government advisers have admitted that building smaller flats was a way to increase supply sooner, and small flats could be justified by Hong Kong’s decreasing household size and the rising number of single applicants.

Decades of tripping over land supply

While the current housing crisis can be traced to Tsang’s term as chief executive, his successor Leung Chun-ying’s attempts to fix the shortfall in land supply ran into hurdles.

Anthony Cheung Bing-leung, Leung’s secretary for transport and housing between 2012 and 2017, said the administration had its hands tied because of opposition politics and a “not-in-my-backyard” mentality in the community.

“Our biggest constraint was, we simply had no land ready,” said Cheung, a former vice-chairman of the Democratic Party and now an academic.

“Before the handover, it only took two to three years to prepare a site for construction, with road connections and other infrastructure. But politics and community objections in my term made that time much longer.

“The political parties said they wanted more housing, but when we went to their district councils to ask for approval to build homes on some sites, or to reclaim land from the seashore, they rejected everything.”

Waiting time for Hong Kong flat rises to 6.1 years, highest in over 2 decades

Funding requests were often dragged out in the Legislative Council by filibustering opposition lawmakers, he recalled.

A study for massive reclamation off Lantau Island did not even get on the Legco agenda after it was blocked by filibustering.

Outgoing leader Carrie Lam Cheng Yuet-ngor finally obtained funding approval in 2020, but only after opposition lawmakers resigned en masse to protest against the government’s disqualification of four of their colleagues.

Cheung also recalled a town project in the northeastern New Territories new development area, which faced strong objection from farmers and activists determined to protect their rural farming lifestyle.

Lawmakers approved funding for the project in 2014 after a month-long protest at the Legco complex, with demonstrators storming the lobby at one point.

Even a tiny ‘nano’ flat is a ‘luxury’

While the government faces chronic shortages of land for public housing, it also charges developers a high price in land sales, saying its stocks are limited and it is not prepared to sell cheaply as it needs such earnings.

Developers have bid astronomical prices to secure plots in prime urban areas. For example, Sun Hung Kai Properties paid HK$25.16 billion in 2018 for a mixed commercial-residential plot at Kai Tak.

Last year, Kowloon Development Company struck a deal to pay the government HK$9.66 billion – the largest premium in four years in Kowloon – to redevelop a former home for the elderly in Ngau Chi Wan and build more than 2,000 homes.

Veteran architect Vincent Ng Wing-shun said private developers who had bought land at high prices sought to maximise their profit by marking up per-square-foot prices as much as possible.

This was especially so in urban redevelopment projects where developers had to pay more to acquire old properties.

As a result, private flats as tiny as 200 sq ft began being marketed as luxury homes. They often came with a clubhouse boasting chandeliers, marble floors and other fancy trappings.

10:08

Hong Kong has until 2049 to fix its housing crisis, but is it possible?

Hong Kong has until 2049 to fix its housing crisis, but is it possible?

“It became a trend for developers to build and package all new private homes as ‘luxury’ properties. It was unavoidable, and only natural that businessmen want to maximise their profit,” said Ng.

As developers chased profits, they also had an impact on the architectural landscape, said Ng, former president of the Institute of Architects.

To have more flats with a sea view, for example, new buildings in a project had to be taller than those in front and aligned side by side to avoid blocking the view.

The result was “wall-like” complexes, and “cake-like” designs of tower blocks built atop bulky platforms containing car parks, shopping centres and sky gardens, commonplace in the 2000s, notably in the cluster of private developments near the West Kowloon Cultural District.

Urban planners have criticised the mammoth buildings for disrupting ventilation at street level, worsening the “heat island” effect.

04:11

Tiny 290sq ft temporary housing a welcome upgrade for some low-income Hong Kong families

Tiny 290sq ft temporary housing a welcome upgrade for some low-income Hong Kong families

Property tycoons shamed into action

In the New Territories, developers sit on huge reserves of farmland and have a decisive hand in land ownership. Although they must negotiate a premium to convert rural land for housing, they can still reap huge profits from having acquired the land cheaply.

Their land bank almost always makes them default stakeholders in any government plan to build new towns. While they are accused of controlling supply, the developers blame delays on red tape and the government’s failure to provide infrastructure.

In 2019, as Hong Kong was rocked by months of anti-government protests, the city’s property tycoons found themselves shamed by state media for “hoarding land”, driving up home prices and contributing to the social unrest.

Since then, they have become more forthcoming in responding to the city leader’s call for help in solving the housing crisis.

Some supported a transitional housing scheme by lending land at nominal rent to build temporary homes for low-income groups. A few have shared their plots to build public housing alongside their private projects.

But Beijing went further, diluting the tycoons’ political influence. In the overhaul of the city’s electoral system, their sway in the all-powerful Election Committee, which selects the city leader, was significantly curbed as they were outnumbered by new “patriots”.

In April, as John Lee Ka-chiu emerged the sole candidate to run in the chief executive election, all the city’s wealthiest tycoons joined him as his campaign advisers.

Martin Lee Ka-shing, co-chairman of Henderson Land Development, which was founded by his father Lee Shau-kee, expressed a willingness to “cooperate with the government in boosting housing supply”. Adam Kwok Kai-fai, executive director of Sun Hung Kai and son of chairman Raymond Kwok Ping-luen, suggested the government could push ahead with turning farmland into new towns.

Elected on May 8, incoming leader Lee has not spoken about the future relationship between his government and developers, but observers expect him to initiate more aggressive land acquisition, including resumption of developers’ land.

He has advocated a “result-oriented” approach to governance. For housing, his priority is to boost the quantity and speed of housing supply while not interfering much in the private property market.

He will also proceed with existing projects including the Northern Metropolis, with a proposed area covering a vast expanse of the New Territories hinterland.

Former housing minister Anthony Cheung said the “inevitable reality” during his time was gone in the new political climate, with developers on board, the opposition wiped out from the legislature, and local voices diminished.

“It might be time to explore options that previously were untouchable, such as country park fringes, for building public housing,” he said. The idea was floated during his time, but a public consultation led by city leader Carrie Lam found public opinion to be split.

“ There has to be some breakthrough in the thinking and reset of the priorities,” he said.

Will John Lee’s task forces help ease Hong Kong’s housing and land shortage?

Lawrence Poon Wing-cheung, a real estate expert at City University who has sat on government advisory boards for housing and land, said while there was now less political opposition, the fundamental roots of discontent over the housing problem remained.

“The shortage of subsidised housing has created a lot of dissatisfaction in society, whether among the poorest, the middle-class or those who are eligible but can’t win the housing lottery. These sentiments won’t disappear,” he said.

Political will would be needed in abundance to solve the problem.

“We are not short of ideas and solutions after all these years of debate. If you are a leader who can lay out a clear policy and give people hope, the road will be easier.”