2. The Chairman welcomed Miss Eva LIU and her colleagues to the meeting and thanked her for the two research reports which were very comprehensive and provided useful reference on housing related data.

Study on Housing Demand Model

(LegCo Paper No. CB(1)165/96-97(01))

3. Members noted that data contained in the research report had been provided by the Administration and that the same data had been used by the Administration in deriving the Housing Demand Model. They were concerned that the Accommodation Generation Rate (AGR) and the Splitting Ratio (SR) of almost half of the housing need components, outlined in Table I of the research report, had been derived without statistical support. Members were worried about the significant percentage of assumptions used by the Administration as housing needs projected on the basis of these assumptions might not be able to reflect the actual housing demand, and that an under-estimation of housing needs would create a serious shortfall in the supply of public housing units in the long term. Members considered it necessary for the Administration to reduce the number of such assumptions as these were too unscientific, and asked the Clerk to follow-up with the Administration.

4. The report also revealed that data used by the Administration for the housing demand model was based mainly on the 1991 Census results. The Chairman expressed reservations at its accuracy having regard to the rapid developments in Hong Kong over the past years, in particular on the growth in population. He was particularly concerned about the assumption that only 17% of legal immigrants from China had housing needs upon arrival in Hong Kong, and advised that the Administration should be requested to advise the basis for the assumption. He considered this unrealistic and was worried about its impact having regard to the fact that over 50,000 such immigrants arrived Hong Kong every year. Some members also pointed out that the findings of the recent survey on disparity in wealth conducted by the Hong Kong Council of Social Services (HKCSS) and a similar survey conducted by the Home Affairs Branch of the Government Secretariat (HAB) indicated that over 30% of legal immigrants from China had immediate housing needs upon arrival in Hong Kong, and this was contrary to the Administrations perception. In order to re-assess the impact of these immigrants on housing demand in Hong Kong, the Research and Library Services Division (RLS) was requested to provide additional information on the basis of the said surveys.

5. Miss LIU explained that similar concern on the quality of data had been raised with the Administration. The Administration had assured RLS that results from the 1996 By-Census and the survey on housing aspirations being conducted would be used to substantiate some of the working assumptions of the Housing Demand Model. In reply to a related question, Miss LIU confirmed that the figure of 7,300 referred to in paragraph 5.14 of the report represented the number of units required to meet the housing need of legal immigrants from China.

6. As to the comments that AGRs of "splitting of unextended family households (UNFH)" and "splitting of extended family households (ENFH)" had on the one hand been derived without statistical support and on the other hand according to past trends, Mr Joseph LEE explained that this was on account of two working assumptions. These included the assumptions that the splitting of UNFH and ENFH would only result in the formation of singleton households, and that the annual increase of these singleton households was about 4,500 or 1% of the stock of UNFH and ENFH and a comparable increase in the number of these households would be maintained for the period 1995 to 2005. While the first assumption was made without statistical support, the second assumed the continuation of past trends. At members request, the Clerk would follow-up with the Administration on the rationale for including AGR in arriving at the housing demand.

7. Members were of the view that the Administration had under-estimated the housing needs arising from new household formation such as first marriages, divorces, re-marriages, and new immigrants. They questioned the basis for the SR of 25% public rental housing: 25% home ownership: 50% private housing. Mr LEE advised that according to the Administration, the ratio referred to was only a preliminary assumption, which would be adjusted according to the findings of the survey on housing aspiration. In reply to a related question, Mr LEE advised that the 5% safety margin for the public housing production programme had been projected according to past trends to guard against possible slippage. The Clerk was requested to follow-up with the Administration on the basis of the SR and how the safety margin of 5% had been arrived at.

8. As to whether the list of housing need components outlined in Table I was exhaustive and whether such factors as the injection of capital from China in the private sector property market during the period 1980 to 1990 had been taken into account in compiling the report, Ms LIU advised that as the focus of the report was on public housing, this factor had not been included. Ms Vicky LEE suggested that the subject of housing demand could be discussed in the context of the report on "Study on Housing Demand" at the latter part of the meeting. Some members enquired if it was possible for RLS to provide a projection on housing demand. In response, Mr LEE emphasized the importance of the weight of each housing need component in projecting the total housing need. While the Administration had indicated that the components of first marriages and redevelopment of public housing accounted for over 50% of the total housing need, it had not provided the weights of these components. Miss LIU concluded that it would be unrealistic for RLS to work on the projection since the Division could only make use of working data from the 1991 Census when results of the 1996 By-Census were not yet available.

Study on Housing Demand

(LegCo Paper No. CB(1) 165/96-97(02))

9. Before commencing discussion on the report, the Chairman requested RLS to provide a clearer version of Figure 1 on page 4 of the report.

10. In referring to paragraph 6 of the Executive Summary, members noted that future demand for housing would stem mainly from population growth. They asked if RLS was aware of any measures which would be available for coping with the significant increase in demand. Ms LEE advised that according to the Administration, a specific policy on population was not available at the present stage. She emphasized that the objective of paragraphs 9.1 to 9.10 in the report was to arouse an awareness of the effect of population growth on housing demand. In reply to a related question, Mr LEE advised that the Administration had affirmed that the Housing Demand Model was capable of adjustment to such changes as population growth and that the results of a number of statistical surveys had already been used to provide working assumptions for the model. The Chairman was not optimistic that housing demand arising from population growth could be met in the short term having regard to the time required for the Census and Statistics Department to consolidate the 1996 By-Census results and the lead time of 62 months for construction of flats. Hon CHAN Yuen-han considered it necessary for a joint meeting amongst relevant panels to examine factors contributing to the growth in population and their impact on the community as a whole.

11. As to the assumption that only 50% of applicants currently on the General Waiting List (WL) would be eligible for public housing, Ms LEE advised that this had been made on the basis of past experience where some applicants had exceeded the income limit when their turn for allocation came up while others failed to meet the seven-year residence rule. Ms LEE added that it was not possible for RLS to substantiate this assumption owing to the non-availability of information on the profile of WL applicants, apart from the year 1995-96. In referring to Tables 3 and 8 of the report, members expressed concern about the impact of income limit on housing demand; they were worried that the Administration would make use of the income limit to contain the growth in numbers of WL applicants. To facilitate members understanding of the working of the income limit, RLS was requested to provide in Table 3 also the relative percentages of income limit to median monthly household income for the years 1992 to 1995. In reply to a related question, Ms LEE agreed with members that the number of WL applicants would be increased in the event of reduction in waiting time. She cautioned however that the pledge for reducing the average waiting time from seven to under five years might be difficult to achieve taking into account the annual increase of 24,000 new household applications for public rental housing (PRH) and the housing allocation programme under which only 10% of WL applicants had been allocated PRH over the past three years. Ms LEE said that the target could only be achieved with an increase in supply of PRH flats. At members request, the Clerk would seek clarification from the Administration on how the pledge for reducing the average waiting time could be realistically achieved.

12. In referring to paragraph 8.16 of the report, Hon Fred LI Wah-ming was not convinced that sitting tenants on WL who were seeking overcrowding relief (OR) did not have immediate housing needs. Miss LIU affirmed that this group of applicants had actual housing needs but only that such needs were not as pressing as those WL applicants living in private tenements. Hon Frederick FUNG Kin-kee shared his experience as a member of the Housing Authority. He said that under the existing housing policy, OR was not included in housing need projection as no additional PRH flats would be involved. In addition, tenants concerned would be required to surrender their PRH units upon re-allocation to larger flats. Taking into account the limited range of flat sizes available in new PRH estates for singleton and two-member households which accounted for about 30% of the overall households, vacated units as a result of OR would be able to meet the demand of these households. Mr FUNG cautioned that both sitting tenants and WL applicants living in private tenement would be affected in the event of OR being included as part of the housing need components. Mr LI remarked that he was not in complete agreement with Mr FUNG as the improved living density for housing allocation including OR would affect the number of PRH flats in one way or another. In reply to a related question, Ms LEE advised that applications for OR from co-tenants sharing a PRH unit as a result of addition of family members from China would be dealt with through the General Waiting List. At members request, the Clerk would seek clarification from the Administration on the number of new WL applicants who were legal immigrants from China or which were families with these immigrants.

13. Hon Albert CHAN Wai-yip noted that apart from providing information on housing demand, the report had not drawn any conclusion on housing need. He enquired if RLS could provide a projection at intervals of five years on housing need and housing demand, as well as the expected number of applicants on the Waiting List when the population would reach 8.1 million by 2011 by making use of information in the Summary Table. Ms LEE advised that it was difficult to work on such a projection as RLS did not have such essential data as the number of people who could meet the seven-year residence rule by the year 2011, their financial situation, and the weights of the 17 housing need components. Miss LIU supplemented that as RLS had reservations on the quality of data provided by the Administration, a projection made on the basis of such information might not be reliable. Furthermore, the summary table served only as a reference and should not be used for calculation purpose. Miss LIU suggested and members agreed that the Administration should provide the projection for consideration by members.

14. The Chairman noted that some uncommitted components such as rooftop dwellers and residents affected by urban renewal where pressure was mounting and which would have impact on housing need had been omitted in the report. He remarked that it would be useful for RLS to conduct a separate study on these components. Meanwhile, the Clerk was requested to obtain additional information on these components from the Administration.

15. Members sought clarification from RLS on whether the potential shortfall of 50,000 PRH flats in the Territorial Development Strategy Review and the downward trend of the flat production rate for public housing in Figure 3 of the report were attributed to the shortage in land supply for housing. Ms LEE advised that according to the Administration, the rate of flat production was constrained by a number of factors such as the provision of land, identification of sites and time for construction. While Hon LEUNG Yiu-chung only agreed with the factor on land supply, the Chairman held the view that the time taken between the identification of sites and completion of flats had positive effects on the rate of flat production. To ascertain the effect of these factors on housing supply, the Chairman asked for further researches to be conducted on the subjects of "Land Supply" and "Lead Time for Construction of Flats". In connection with the latter research, Mr Albert CHAN Wai-yip suggested that reference from overseas countries such as Singapore should be obtained. Ms LIU took note of the suggestion but cautioned that according to past experience, relevant authorities in Singapore might not be particularly forthcoming with the provision of information; RLSs requests for data in relation to the research on "Housing Need and Housing Demand" had been turned down for the stated reason that disclosure would prompt speculations in the property market. Nevertheless, Ms LIU undertook to follow-up on the matter.

16. As regards the schedule for completion of the reports, Ms LIU advised that these should be available earliest in mid-January 1997. The Chairman advised that copies of the reports should also be sent to the Planning, Environment and Lands Branch (PEL) for information upon completion as the Secretary for PEL had stated on another occasion that the shortfall in land supply for public housing was attributable to such factors as increased housing demand, rising expectations and new eligibility criteria.

III Any other business

17. Members agreed to hold the next meeting on Tuesday, 26 November 1996, at 10:30 am. The Administration would be invited to discuss the research report on "Housing Need and Housing Demand" and to respond to concerns raised at the current meeting. Another item of "Lead time for construction of flats" would also be included for discussion and the Real Estate Developers Association of Hong Kong was to be invited to express views on the time and process involved in flat production. Members of the Panel on Planning, Lands and Works would also be invited to join in the discussion. On the future of the Subcommittee, the Chairman advised that it would be dissolved at the conclusion of the public consultation on the Long Term Housing Strategy Review.

18. There being no other business, the meeting closed at 10:35 am.

Legislative Council Secretariat

5 December 1996

Last Updated on 20 August 1998