The future of public housing

Macau, particularly its government, used to be famous for its pace of life – its “take your time” attitude. That contrasted remarkably with the highly competitive rush in Hong Kong.
So much has changed, though. Look at the new public housing projects. A couple of years ago we could still see a hill, even though it was just like a façade, at the Coloane end of the Cotai Strip. That hill has now become a public housing estate of unprecedented size.
This is perhaps evidence of the determination of the government to help the community by reacting promptly to its needs. Another recent deed of merit was its swift reaction to the shortage of baby formula, rationing the supply among mothers rather than allowing it to be sold freely to any and all purchasers.
So what is there to complain about? Well, think about how we once heard from the government that Coloane is the city’s lung, meaning that no housing should be built there. One may say that it is much more important to find land where people can live than to preserve the countryside. Fair enough!
But then, is this doing any good? Well, think about those one-room flats that are so little in demand. Why are there so many one-bedroom flats to begin with?
Perhaps it is because small households have waited for so long that they have expanded and therefore cannot all fit in one-bedroom flats. Is it because the planning assumptions have become obsolete? This is probably not the case, as we are talking about only a couple years of building work, which would have allowed changes in design, if necessary, even as late as three years ago. This means there is a strong possibility that the government did not have a well-thought-out plan when it decided to undertake the housing project – another example of hasty decision-making.
Now that all the old waiting lists to buy subsidised housing have been cleared (some households lost their place because they could not find suitable flats that they could afford), the remaining one-bedroom apartments become available for new applicants. The question is whether there will be new demand for those same flats that had no takers before.

Emptying the nest

One source of new demand may be young couples that were not on the old waiting lists. A new supply of small flats could solve part of the housing problem here, by serving as homes for young couples or newlyweds that cannot afford private housing, given the very high downpayments, even after borrowing a lot from their relatives.
There is another group of potential buyers. You must be at least 18 years of age to be eligible for subsidised housing. Given the relatively low price, the one-bedroom flats may be attractive to young people that wish to live alone.
An immediate effect would be that young people would be encouraged to live apart from their parents. This is probably acceptable to some households as long as the youngsters have joined the labour force and are able to support themselves.
However, the minimum age for eligibility means fresh graduates from high school can apply. The consequences of this are hard to predict. If the youngster does not even have a job yet, or decides to study further, then his or her family are likely to end up paying for the flat. So would the purpose of the purchase really be to meet a need for housing? Or would purpose the purchase be investment, or to claim a “fair share” of social provision? The society as a whole would be worse off if this became a disincentive to move up the social ladder.
With the unprecedented, overwhelming economic development of Macau, finding a job is easy. A typical young person can have a job with decent pay and get decent housing from the government without much effort, and can easily lose the sense of competitiveness. So we had better wish that Macau continues to prosper in the coming decades.

Swift but thorough

The government has promised to reach its goal of 19,000 new homes in public housing in stages. This is somewhat like starting from scratch, giving the government a valuable opportunity to plan well.
What is most needed is not to find or reclaim land, but to study what kind of quality and quantity of housing the community actually needs. It is good to see that a study of Macau’s demographic development has started.
Ideally, there should be a better idea of how many flats of various sizes are needed and, more important, of what the ratio of public housing to private housing should be. Without this information, uncertainty about how much public housing the government will provide, when the next application period will be, what would-be applicants should do if they miss the period and whether the price will continue to rise will persist within the community.
Related to this are questions about how much more housing developers will build and how much longer they will continue building. When people are uncertain but have some extra cash, they are inclined to take advantage of low interest rates to join the struggle to buy private housing, thereby pushing up prices. Therefore it is good to see that the government is legislating on the sale of unfinished housing, changing the procedure for obtaining permits for housing developments and taking other measures to curb speculation and unreasonable obstruction of development. The key is to plan cautiously and coordinate all these measures, because their effects are all interlinked.
In a nutshell, the government should draw up its housing programme swiftly, but thoroughly and systematically, and be open about it. Forget about any lengthy consultation period (constructive opinions will always be expressed in a short time). Once a reasonable plan is available, the market will react accordingly.
Who ever said being a government decision-maker was easy? But at least we now have some examples for Hong Kong to learn from.