The Chairman advised that a clearer version of Figure 1 in the Report on Study on Housing Demand, and a response to members requests raised at the meeting on 29 October 1996 prepared by the Research and Library Services Division of the Legislative Council had been tabled at the meeting.

II. Housing Demand Model and Housing Demand

(LegCo Paper No. CB(1) 369/96-97(01) - (03))

2. At the invitation of the Chairman, the Principal Assistant Secretary for Housing (PAS for H) highlighted salient points in the information paper. He said that technical modifications to the Housing Demand Model and revisions to the assumptions had been made in the light of comments from members and other sources. The results of the revised projections would be included in both the Consultative Document on Long Term Housing Strategy Review and the Final Technical Report to be published by the Planning Department (PD) later in the year. PAS for H emphasized that any projections of housing demand were no more than a snapshot which would require regular review and adjustment to take account of such new data as the results of the 1996 By-census and those of the Survey on Housing Aspirations commissioned by PD, as well as socio-economic changes. The Principal Government Town Planner/Territorial (PGTP/T) supplemented that like other projection models including those relating to traffic and environment, the current housing demand model was designed for strategic planning purpose which could be applied flexibly on different working assumptions. It was user-friendly and capable of adjustment to different scenarios developed for deriving housing demand and production targets in the next ten years. The important point was to relate the forecasts in demand to land supply and infrastructural provisions. He then briefed members on the main features of changes to the original model structure. These included deletion of the Conversion Factor from step (3) so that the demand for private housing would, like that for public housing, be equal to private housing needs; consequential adjustment to flat production ratio in step (4) to exclude the allowance for the housing demand of those households who could not afford private housing but were ineligible for public housing; and exclusion of safety margin for the public flat production requirement.

3. Members did not agree with the proposed exclusion of safety margin as this would serve as a safeguard against possible slippage in housing production programme. They cautioned that an under-estimation of housing needs in 1987 had given rise to a serious shortfall in the supply of public housing flats. To avoid similar recurrences, members considered it necessary to reinstate a safety margin for the public flat production requirement. The Government Town Planner (GTP) explained that as the safety margin related closely to supply rather than demand, it would be more appropriate to include this in the land production programme. Furthermore, the safety margin under the public flat production requirement might not be able to size up the actual demand having regard to such changing factors as population growth and the number of new immigrants from China. PGTP/T supplemented that a safety margin of 6-10% had been included in the land production programme for the period 2001-06. As to whether the flat production requirement would be matched with actual flat supply, PGTP/T advised that a "bottom up" approach was adopted in projecting overall housing demand. A comprehensive review on land requirements for housing and other purposes would be conducted annually by the Land and Buildings Advisory Committee. The revised estimates would then form the building-blocks of the model in projecting new housing demand. While appreciating the availability of a review mechanism, some members expressed doubts on whether timely adjustments could be made to the flat production requirement. PGTP/T assured members that all assumptions being made would be logically derived and well substantiated. Furthermore, the model would be used to test every extreme or conservative assumption. While acknowledging the need for a reasonable safety margin, PAS for H emphasized that the current model was designed to produce the best estimates of future housing demand for different housing need components, including new marriages, divorces, legal immigrants from China and splitting of complex family structures. These estimates would be reviewed annually or more frequently if so required to take account of changing circumstances. By way of illustration, GTP advised that the Accommodation Generation Rate for new marriages had been revised to 79% (Low) and 83% (High) based on the 1991 Population Census.

4. Members noted from the information paper provided for the meeting and from the advice by the Senior Statistician at the meeting that many projections of housing demand were based on statistics from the 1991 Population Census. They were extremely concerned that, having regard to the rapid changing circumstances in Hong Kong, data from a year as far back as 1991 should be used to project housing demand well into the year 2006. GTP emphasized that these projections had been made according to the best available information and that some results of the 1996 By-census were only made available in the last two weeks leaving little time to update data in the information paper. He assured members that various technical assumptions would be reviewed in the light of the results of the 1996 By-census and the Survey on Housing Aspirations. The Assistant Secretary for Housing (AS for H) clarified that these projections had already been updated in the light of the 1994/95 General Household Survey. PGTP/T remarked that the important point was to maintain an adequate supply of land for housing to meet demand.

5. Members considered the assumption that only 17% of legal immigrants from China had housing needs upon arrival in Hong Kong unrealistic. An accurate estimate was important taking into account the arrival of over 55,000 such immigrants every year. PGTP/T and GTP agreed that immigrants from China was a major component of population growth in Hong Kong. Based on an analysis of past statistics, about 17% of these immigrants had no next of kin in Hong Kong or were adults joining their parents in Hong Kong and who would become heads of households, whereas the remaining 83% were coming for the purpose of family reunion and thus had no immediate need for housing. On the basis of three members per household, the estimated number of such legal immigrants would be about 28,000 per year. AS for H however pointed out that this figure had yet to be confirmed to take account of results of the 1996 By-census and the Survey on Housing Aspirations to be released in mid-1997.

6. The Chairman considered that in order to update the basis of the Long Term Housing Strategy Review currently being undertaken, there was a need to expedite the schedule for the availability of data from the 1996 By-census. The Clerk was requested to follow-up with the Census and Statistics Department.

(Post-meeting note: A letter to the Commissioner for Census and Statistics was issued on 27 November 1997. The Commissioner replied on 3 December 1996 and advised that specific data required by Government departments were being made available as from November 1996 while projections including population projections would be available within the first quarter of 1997.)

7. In response to members on the Splitting Ratio (SR), GTP advised that a new method had been adopted to take account of two different scenarios viz. household income and existing eligibility criteria, and housing preferences. The former was matched against the Housing Authority (HA)s Income Limits to establish the proportion of households eligible for public housing, and the latter was based on the actual take-up rate for Public Rental Housing (PRH)/Home Ownership Scheme (HOS)/Private Housing (PH), pending the results of the Survey on Housing Aspirations. AS for H supplemented that the estimated overall SR of 25% PRH : 25% HOS : 50% PH would be revised in the light of the results of the 1996 By-census.

8. Members were not optimistic that the average waiting time for PRH could be reduced from seven to under five years as pledged, and that the Housing Department (HD) and HA could achieve its production target of 106,000 PRH flats in 2001 having regard to past experience where the highest number of flats both the private and the public sectors could build in a year was about 80,000 units. Some members were worried that the Administration might restrict the sale of HOS flats to PRH tenants only in order to recover more units to make up for the shortfall in PRH flats. This would deprive tenants in private premises of the opportunity of acquiring HOS flats. PAS for H said that the flat production rate over the past years was only a reflection of such factors as supply and demand, as well as market sentiments which might not be a good indicator of the actual building capacity. He emphasized that the Administration was committed to building 106,000 flats in 2001 and that regular discussions would be held between his Branch and HD on implementation of the Public Housing Development Programme (PHDP) to ensure that the programme was on schedule. GTP supplemented that sufficient land had been reserved and that there were ongoing discussions among departments concerned with a view to expediting technical procedures.

III Lead Time for Construction of Flats

(LegCo Paper No. CB(1) 369/96-97(04)-(08))

Meeting with the Real Estate Developers Association of Hong Kong (REDA)

9. At the invitation of the Chairman, Mr C W TONG briefed members on the chart entitled "Comparison of development period before and after the introduction of new measures as proposed in the Town Planning White Bill - an urban site development". He said that the current average lead time for construction of simple development projects without Planning Applications would be 39 months; these included five months for obtaining Building Plan Approvals despite the statutory time of 60 days, three months for obtaining Structural Plan Approvals, two months for Consents to Work, 27 months for construction, and two months for Occupation Permits (OPs) and Fire Permits. For projects with Planning Applications or Master Layout Plans, an additional three to 12 months would be needed. Furthermore, another seven months would be required to obtain Environmental Impact Assessment reports. Mr TONG added that the situation would be aggravated after implementation of the Town Planning White Bill. Under the proposed legislation, developers would be required to conduct public consultation for projects with Planning Applications; obtain Planning Certificates before processing of Building Plans by the Buildings Department (BD); and acquire no-objection letters from the Planning Authority before issuance of OPs. Mr TONG said that these additional procedures would delay all development projects, in particular those of complicated nature.

10. Hon Edward Ho Sing-tin agreed with REDAs observations and pointed out that the delay in obtaining Building Plan Approvals might be due to manpower shortage of BD. He suggested that in order to expedite the entire process, the BD should assume the role of a central co-ordinating unit, and that approvals from the Lands Department (LD) and the PD should be processed in parallel with the Building Plan Applications. The Chairman shared his experience in dealing with building projects where numerous conferences had to be held amongst departments concerned and where difference in opinions amongst departments would complicate the issue. He considered it necessary to establish a central co-ordinating mechanism as suggested by Mr HO.

Meeting with the Administration

11. In response to members, the Assistant Director (Special Projects) advised that in the wake of a review in 1995, the average lead time for construction of all PRH and HOS projects under PHDP had been reduced from 72 to 61 months. However, as two additional storeys had been added to all standard domestic blocks, an extra one month of construction time was required.

12. A member considered that the only way to meet the production target for the year 2001 would be to reduce the lead time for construction, and urged the Administration to consider streamlining the planning and development process. PAS for H advised that the Administration was committed to identifying adequate land for housing to meet demand. He took note of both members and the trades concern on the need for an effective and efficient regulative framework, and assured the meeting that the Housing, and the Planning, Environment and Lands (PEL) Branches would consider reviewing the planning and development process having regard to views expressed. PGTP/T added that while the Administration would do its utmost to address concerns of the private sector, a regulatory framework was required.

13. To facilitate a better understanding of the operation of the nine departments in the planning and development process, members considered it useful to invite representatives of these departments to the next meeting of the Subcommittee. PAS for H undertook to relay members request to the PEL Branch.

(Post-meeting note: A joint Panel meeting of the LegCo Panels on Housing, and Planning, Lands and Works had been scheduled for Tuesday, 18 February 1997, at 8:30 am.)

V Any other business

14. There being no other business, the meeting closed at 12:45 pm.

Legislative Council Secretariat
26 February 1997

Last Updated on 20 August 1998