We must reform how we price the land we need for new homes

The government recently determined it would proceed with a plan for the development of the Northeast New Territories (NENT).

The plan takes into account comments from developers and private land owners who had urged the government to allow them to participate in the development process. But this is only a first step and there is still a long road ahead before the plan materialises.

Given Hong Kong's expanding population and people's quest for better living environments, demand for housing will always be high. Any shortfall in supply will result in increases in home prices, which further stimulate demand, resulting in a vicious price spiral.

Although administrative measures such as increased stamp duties have successfully dampened demand, the real solution to this price spiral lies in an increase in the supply of homes.

The development of new towns, from Tsuen Wan and Kwun Tong to Tseung Kwan O and Ma On Shan, has provided homes for millions of people. However, new-town development now faces many more hurdles than it did a few decades ago.

More attention is now being paid to environmental and conservation issues, meaning both the government and developers now have to resolve numerous issues not even considered in early developments. We should expect strong protests about the NENT development proposals from environmentalists and the town planning process will be lengthy and meticulous. The development densities of new towns will also be much lower than those of their predecessors, making the cost of land for homes much higher than before.