What could have possessed those people in Hong Kong snapping up mini apartments with an average size of less than 150 square feet, or 14 square meters — the size of the kitchen in a modest Shanghai apartment — for more than HK$2 million each?
The reason for this seemingly ludicrous phenomenon is simple. At current prices, mini apartments are the only properties many prospective homebuyers can afford.
Attracted by higher profits and faster turnover, developers are happy to oblige. These minute apartments usually command a higher price per square foot, and can be sold much more easily than larger units.
As a result, apartments are getting smaller, and prices are going up. But none of that seems to have discouraged new buyers who appear to have completely lost confidence in the government's efforts to increase housing supply to bring down prices.
To be sure, few people doubt the government's seriousness and resolve in addressing the housing problem. But, people are getting impatient because they're not seeing any appreciable result from government efforts in the past few years.
Official data are showing aggregate increases in housing supply. However, prices have continued to climb and the waiting time for public housing is getting longer.
The government-initiated public debate on land use has provided a platform for politicians, property experts and social activists to express their views. But, the public has become numb by words and rhetoric. They want action.
The difficulty in identifying new land is often cited as the major stumbling block in building more public housing. The government can get around that constraint by withholding a few tracts of land earmarked for sale at public auctions to build subsidized homes.
This is not really an innovative idea. The government had, in the past, built public housing in what were seen as choice locations in urban areas, such as the large public housing estates in Tai Hang, Pok Fu Lam and Ho Man Tin.
A few housing estates alone aren't going to do much to solve the city's housing woes. But, they can produce much needed results in a relatively short time to help boost public morale.