How Hong Kong is trying a new solution to its land value problem

When Hong Kong’s first chief executive, Tung Chee-hwa, announced his housing plan in 1997, the ambition was extraordinary. The government would produce at least 85,000 flats a year across the public and private sectors, and raise the home ownership rate to 70 per cent. The idea was simple. Build more homes, make housing more affordable and allow more families to own a piece of Hong Kong. Then history intervened.

The Asian financial crisis struck. Property prices collapsed. The economy weakened. The 85,000-flat target quickly became politically toxic, and the government retreated. Nearly three decades later, Hong Kong is still wrestling with the same dilemma: how much land can the government release without destabilising the value of the land already in the system? That is the uncomfortable question behind the Northern Metropolis today.

Rising land and property values can generate government revenue and household wealth, but they also make it harder for younger generations to enter the housing market. Hong Kong took this model to an extreme.