As the old saying goes: Be careful of what you wish for, lest it come true.

What many Hong Kong people wish for the most at this time is a drop in housing prices to make it possible for them to buy their own homes. In response, the government has made affordable housing as its top priority.

But government efforts to increase land supply, though producing appreciable results, have failed to dampen the rise in housing costs. Last week, a tract of development land in Ap Lei Chau - made popular by the new subway extension - was sold to a private developer at a record price in a hotly contested auction.

Developers are willing to take the risk of buying land at record-setting prices because they believe housing demand in Hong Kong is, as one major developer said, "inelastic". The demand for housing is, in turn, fanned by expectations of inflating property prices, creating the impression in the minds of prospective homebuyers that if they don't buy now, they will miss the boat.

To many Hong Kong people, a home provides not only a roof over the head but also the most secure storage of wealth against inflation and other threats. Many families are willing to skimp on other household expenditure to afford the monthly mortgage loan repayments. Studies have shown that the average working-class family pays up to 50 percent of its household income on mortgage repayments each month.

Unsurprisingly, the property sector and the financial sector are the major pillars supporting the Hong Kong economy. Indeed, the health of the financial sector is highly dependent on that of the property market because brick and mortar are by far the most common collateral demand by banks in lending to businesses and individuals. What's more, many local banks derive a large part of their incomes from property development financing and mortgage loans.

Without a doubt, housing prices in Hong Kong - ranking among the highest in the world and surpassing even London, New York and Tokyo - have become increasingly "unaffordable" even to middle-class families. The question is how big a fall will make property prices "affordable"?

A more relevant question would be when were property prices ever regarded as "affordable"? The answer is obvious to any homeowner who lived through the horror of the great property market crash triggered by the outbreak of the Asian financial crisis in 1997. Within 6 months after that, average home prices plunged a total of 60 percent from the pre-crisis height.

The rapid erosion of asset values posed a serious threat to the integrity of the financial system and severely depressed consumer spending, plunging the service-oriented economy into deep recession. The much-lowered property prices, affordable as they were, failed to entice too many prospective homebuyers to go bargain hunting.

Obviously, the government is addressing a completely different housing problem now. In doing so, it is walking a tight rope in balancing the interests of many different stakeholders with the predictable result of pleasing no one. This was made obvious by a proposed New Territories project that puts the housing chief in a tight spot.

This has led some economists and social activist groups to urge the government to think outside the box by concentrating its efforts and resources in addressing issues that are considered most pressing rather than adhering to the holistic approach that hinges on increasing land supply to be used in accordance with a predetermined formula by the public and private sectors.

For instance, a labor group said that the worst problem is with subdivided housing that provides squalid and unsafe accommodation to more and more families. The urgency of the problem was brought to the forefront by a recent fire in one of these structures that led to the death of several tenants.

Recognizing that an outright ban on subdivided flats, unsafe as they are, is not feasible, the group suggested that the government should require the registration of these structures and set aside a fund to help improve living conditions in them. Of course, the longer-term solution is to rehouse the subdivided flat tenants in subsidized public housing. But immediate action needs to be taken now to make lives easier for families forced to take the risk of living in these substandard structures.

The government has blamed the long four-year wait for public housing on the difficulty in finding suitable sites for building large-scale projects while selling large tracts of land to the private sector. This has raised the question of why the government can't simply use some of this land for public housing development to shorten the waiting time to a more acceptable three years, as it had promised.

To be sure, increasing land supply is the most viable long-term solution to the housing shortage problem. But the public is running out of patience and wants to see immediate results.

The author is a veteran current affairs commentator.

(HK Edition 02/27/2017 page8)