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The housing arena in Hong Kong has undergone dramatic transformation due to the change in government in 1997 and the subsequent economic recession engendered by the Asian financial crisis. This paper applies the sustainable development perspective to investigate whether policy changes and government responses to the collapse in the property market have made the distribution and consumption of Hong Kong more equitable. It argues that the government's emphasis on home ownership has intensified horizontal and vertical inequity but that the economic recession has the unintended effect of reducing vertical inequity between the low- and the lower-middle-income groups. Simultaneously, the recession has reduced the housing choices and mobility of the middle-income groups, rendering them the real losers of the housing policies and economic changes after 1997. Copyright © 2002 John Wiley & Sons, Ltd. and ERP Environment.

This paper investigates the approaches and the effectiveness of the government of Hong Kong in using the planning system and land policies to help provide affordable homes, widening the planning and affordable housing debate to urban systems in which governments possess both landownership and development rights. This paper argues that land and development right ownerships enable the Hong Kong Government to operate a massive public housing program to meet the housing needs of half the population at affordable rent and price levels, without having to resort to planning tools. However, the availability of subsidized housing still depends on other factors, notably government commitment and priority in solving housing problems. Landownership is less useful in regulating private housing prices as political and economic factors often override the situation. The empirical findings of this study suggest that land supply was often adjusted in response to the economic environment rather than shaping market outcomes. Hence, government ownership of land and development rights is found to be more effective in providing affordable subsidized housing to low-income families through the producer-subsidy approach rather than in regulating housing prices to enhance the affordability for private housing consumers.

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