Page 41 - ENGLISH_FullText

bility is lacking for those who are able and diligent is their inability to convince
people to invest in their future.

The SHS is the most feasible choice to address this concern. The
advantage of the SHS is that by allowing bona fide homeownership in fu-
ture public housing units it provides a cheaper means for arranging financ-
es. By borrowing against home equity, a parent can provide a better educa-
tion for their children.

Furthermore, families have a stake to stay together when marriag-
es come under pressure. By keeping families together, we prevent more
children falling into a state of disadvantage that would be detrimental to
their pursuit of upward social mobility. Since social mobility is closely asso-
ciated with homeownership, the SHS would relieve Hong Kong of the bour-
geoning problems of income inequality and poverty.

Bad neighbourhoods would also become a thing of the past. Own-
er-occupiers of public housing units will have an incentive to maintain the
conditions of their dwellings and closely guard the status and security of
their neighbourhood. It induces the investment of social capital into the
neighbourhood and as a result, a better environment for social mobility can
be realised.

Not only can families and stay together and children are benefited,
the elderly population can also tap into the property asset and may use it
as retirement protection. With a home, a reverse mortgage can allow the
elderly population to use the home equity for their retirement in order to
meet daily expenses.

7.4 SHS and Social Justice

Our present PRH programme is operated at a recurrent loss year
after year. Developing more PRH units is a highly inefficient policy and it
drains public spending. Historically, the cost of rental units was financed
with cross-subsidies from the sale of HOS units. Since the HOS units are
sold at a discount, the land values are not fully monetised. The HOS buyer
pays for a fraction of the total land value and the Housing Authority holds
onto the rest.

In essence, both PRH and HOS units are financed through monetis-
ing part of the land values of the public housing units. The land values are
not fully monetised because parts of the land premium is still unpaid and
not wholly settled with the government.

If we do not allow public sector housing occupants to trade their
units on the housing market, then the society will lose the value inherent in
that asset. What is happening is that well-off households are giving valu-
able assets to less well-off households, but their use is restricted to shel-
ter only. The land values are partly dissipated and therefore lost to all. All
households suffer a decline in income as resources are destroyed by limit-
ing their use.

41