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8. Concerns

8.1 Property Prices

A major concern about the privatisation of PRH and HOS units is
that it may lead to a flood of new housing units into the market and force
property prices to go down. This may affect long-term asset investment
and dissolve family savings. As reiterated in the first Report, the Scheme
only covers newly-constructed public housing units and therefore will have
little or no effect on the private housing market.

However, OHKF is of the opinion that in the long-term, the existing
stock of PRH and HOS units should also be considered for privatisation.
While the property price concern of privatising the existing stock is
warranted, we believe that the possibility is minimal. This point can be
illustrated with the privatisation of public community housing in the United
Kingdom during the 1980s. A case study of this is presented to confute
and ease the fears that property prices will be affected to the detriment of
investors and families.

8.1.1 The Right to Buy

The UK Housing Act, more commonly known as the Right to
Buy, was implemented on the third of October 1980. It was a major policy
initiative of the Conservative Party led by the late Margaret Thatcher who
swept to power in the UK general election of 1979.

By international standards, the UK in 1980 had a large social
housing stock with council housing catering for 6.5 million households, or
nearly one third of total UK households. The Conservative Party saw the
Right to Buy as a mechanism for increasing owner-occupation and also as
a response to the desire of some tenants to own their place of dwelling.

Since the introduction of the Right to Buy, more than 1.9 million
council homes had been sold in England alone. Figure 7 indicates that the
initial reception of the Right to Buy was overwhelmingly positive with social
housing sales breaching the 160,000 mark in 1983. It declined in the mid-
1980s and rose again in the late-1980s. The second surge can be attributed
to the extension of maximum discounts for properties.

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