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Recently subdivided units have become a hot issue in Hong Kong. There is no universal definition to what constitutes a subdivided unit. Nevertheless, a general perception is that subdivided units refer to housing units which are divided within a residential apartment. These subdivided units have their own electricity and water supply. Some subdivided units have their own kitchen and washroom while others have shared bathroom and kitchen. Very often the living environments of subdivided units are far from satisfactory. There are cases where families of five or six people need to live in a subdivided unit of less than 100 square feet. The fire incident at Fa Yuen Street also attached a stigma to subdivided units. In short, subdivided units are manifestations of the acute housing problem in Hong Kong.

There are now around 68,000 subdivided units in Hong Kong with around 170,000 occupants, a survey commissioned by the Long Term Housing Strategy Steering Committee revealed last week. Many concern groups are skeptical of the results. Critics say the numbers have underestimated the actual problem, with some even accusing the government of manipulating the numbers to get a lower figure. According to surveys conducted by some concern groups, the number of subdivided units in the city stands at more than 200,000.

It is impossible to get an exact number unless we launch a mass census. However, given the resources and time constraints, such a survey is not possible to implement now. Even at government level, censuses are conducted on a 10-year cycle, with a bi-census conducted at 5-year intervals. At best, the government can conduct surveys according to generally accepted methodology and perform projections. The numbers quoted by concern groups are usually projections from surveys. Hence, the disagreement over the number of subdivided units represents different views or interpretations of the survey, just like any other studies.

From the policy angle, whether there are 68,000 or 200,000 subdivided units is not the major issue. Even if 68,000 is a correct number, the problem of subdivided units still deserves a real solution. Hence, the focus should be on how to handle the problem, rather than arguing the validity of survey results.

Many people suggest a simple approach to the problem, that is, a ban on subdivided units. According to this idea, government should not tolerate such a low standard of living and eliminate the units as a result. But that doesn't address the basic question of why people need to live in subdivided units. If we just solve the problem by banning subdivided units, their inhabitants still need places to live. It's like a doctor treating the symptoms without curing the disease. Clearing this is missing the point.

The deep-rooted problem lies with the high cost of housing in the city, and the mismatch between residential needs and job opportunities. Hong Kong is famous for its high housing cost, and subdivided units can provide grassroots housing opportunities with relatively low rents. To many people, subdivided units are indeed solutions to their housing needs. But, if housing costs were not that high, people's demand for subdivided units would also be lower. Hence, the critical point is still the acute shortage in the supply of public housing. If the people can live in rental public housing, the problem of subdivided units can be lessened tremendously. However, the issue of how to increase rental public housing remains.

Another deep-rooted problem with subdivided units is the mismatch between housing and job opportunities. As city areas tend to have more job opportunities, it is no surprise to observe high demand for housing needs in the urban districts. With huge demand for housing and lower affordability, it is natural to have low-cost housing options. From this perspective, subdivided units are just natural solutions to this mismatch problem. If we can provide more job opportunities in the rural areas, people need not be congested in subdivided units in the city districts.

From an economic point of view, the existence of subdivided units is a natural evolution from the market to economic problems. If we are really determined to solve this problem, we need to attack the deep-rooted housing issues. We cannot have a solution if we are not tackling the real problem.

The author is dean of the School of Business at Hang Seng Management College.

(HK Edition 06/06/2013 page1)