The idea of increasing the ratio of public housing to private development was broached several months ago; nobody seemed to take it seriously then.

Cynics scoffed at the proposal, predicting it would never be able to survive fierce resistance from entrenched property interests led by an oligarchy of the half a dozen largest developers.

Some economists criticized the idea, postulating it would accomplish nothing other than further distorting free-market forces.

Supporters of the proposal argued that under the old system, increasing land supply alone will not have the effect of bringing down home prices as long as the property oligarchy maintains a stranglehold on final supply of homes.

Feverish efforts by the government to create land in the past few years failed to bring down property prices, resulting in a loss of public confidence in traditional housing policy. Meanwhile, public patience is seriously strained by the wait for public housing that is growing longer by the year.

It was naive to believe a sharp increase in government land bought by developers will lead to a flood of new apartments in the market. In reality, developers have been most adaptive in controlling supply to ensure prices continue to rise, as they have done in the past several years.

Public discontent with rising home prices apparently has led to a new housing policy. In her first policy speech, Chief Executive Carrie Lam Cheng Yuet-ngor gave the signal of change by emphasizing the need to build more "affordable" homes for sale to lower-income families at below market prices.

This shift in emphasis represents a sharp departure from the old housing policy of focusing on building basic apartments in large housing estates for rent to the public at highly subsidized rates. To make the new policy successful, it is necessary to assign a larger than before portion of newly created government land to public housing development and reduce the part to be sold for private developments in public auctions.

Doubt about the government resolve in pushing through its new policy was greatly mitigated by the ambitious plan announced last month to build more than 10,000 units of subsidized housing on nine different sites under the new land supply ratio. These units would be sold to families qualified under the scheme at discounts to market prices ranging from 30 percent to 50 percent.

To expand the scheme to meet projected demand, the government will have to continue to increase land supply. It's widely agreed that the most cost-effective way to do so in the mountainous terrain of Hong Kong is through sea reclamation.

Indeed, most of the flat land on Hong Kong's main island and a large part of the Kowloon Peninsula was reclaimed from the sea. It is in recent years that land reclamation has become a topic of controversy, stirred up by environmentalists and social activists. Opposition politicians seize upon objection to sea reclamation as a weapon against the government.

The most often-cited reason to oppose sea reclamation, or any form of land creation for that matter, is that a disproportionate portion of the benefits of such projects, funded by the public, is shared by a few developers who have a virtual monopoly on government land auctions.

Such charges have prompted the government to introduce measures to enhance openness and transparency of such auctions.

What's more, the new policy that appropriates a large portion of government land for low-cost housing development should help increase the public's share of the benefit. But it is accomplished at the expense of land sale income which helps finance a significant portion of the government's recurrent expenditure on social services and healthcare.

Now that escalating property prices are a major source of public discontent, the government is correct in shifting its priority to building more public housing in addition to creating more land. This policy has been proven to work in Singapore where most families live in government-built homes.

It has become increasingly clear that the free market in Hong Kong isn't all that free when it comes to property. And it's about time for the government to take a more direct approach in addressing the issue.

The author is a current affairs commentator.

(HK Edition 07/13/2018 page12)