No_5_October_and_November__1938 — Page 9

Hong Kong Builder

13

TALE OF THREE CITIES

For some reason or other, the idea of home building on the deferred monthly plan has never received much encouragement in Hong Kong from financial and official quarters.

That there would be sufficient response from the responsible wage-earning section of the community in Hong Kong, we know.

We bring the following article to the attention of those in Hong Kong whose influence and wealth could do a great deal to encourage home-building--to the benefit of themselves and a deserving class of people.

The Editor.

Home building in London, Paris and New York- the three great cities of three great nations-reflects to a remarkable extent the political, social and economic conditions that prevail.

In London, as well as in all England, private home building continues to flourish-the first half of 1938 being only 11 per cent less than in 1937, which was a banner year in which some 340,000 houses were built. In England building credit is plentiful. Confidence in the government prevails, labour is not unreasonable in its demands (the 46-hour week is standard) and the average skilled building worker earns about 1s. 7d. or 40 cents, U.S. Currency, an hour. Building material prices have also been maintained at reasonable levels. Most important of all for building men to consider at this time, private initiative has not been restricted or frightened out of existence by government competition in housing.

England has tackled its frightful slum problems aggressively and intelligently and is doing a large volume of public housing, but this housing is built for slum dwellers by local housing authorities and in such a way apparently as not to destroy the market for private homes built by private builders and developers. Housing reform, like social and labour reforms in England, has progressed slowly but surely over a period of years and is generally accepted by all. Government subsidized housing for the very low income groups now amounts to less than 20 per cent of the total home building in England.

Confidence in the future is shown by the fact that in England homes can be purchased at 10 per cent down or less and paid for over a period of 20 years. Interest is generally low-that is, 41⁄2 to 5 per cent. The British budget is balanced and business and industry are reasonably satisfied that future prospects are sound. This picture presents a vivid contrast with conditions in Paris and in France. There private home building is practically nonexistent. The French politicians have done a great deal of talking about public housing but have actually done very little construction. The build- ing trades generally and the building industry are dormant. Why?

Stagnation in Paris.

The answer is clearly shown by the following:-

1. Money is scarce because capital has fled to America, Holland, England and Switzerland in fear of further devaluation of the franc. No banker will make a 20-year loan on a house or even a 10-year loan because he is afraid of further inflation which would mean he would not get his money back. Interest rates The are exorbitantly high, financing terms difficult. national budget continues to be unbalanced and the political situation is such that there is little hope that it will be balanced in the near future.

2. Radical labour and social reforms have been

put into effect so rapidly that they have seriously upset business conditions. Labour has a strong political position and has secured a universal 40-hour work week law which has been a great shock to business and industry in a country accustomed to long hours. Building costs and building wage rates have sharply increased, while at the same time rents have been fixed by law an unwise and unwieldy government action which has, of course, effectively killed private construction for profit. 3. Confidence is lacking both in government policies and future labour activities. The international situation and the possibility of war also have an unsettling effect. In Paris in 1936 building permits were taken out for only 35 single family dwellings this for a city of five million persons. Permits for all kinds of dwellings, including apartments, totalled only 154, covering less than 2,000 family units. The normal renewal of dwellings should be 2,000 permits or 10,000 dwelling units per year. Permits for all types of construction were 65 per cent less than in 1913.

Thus we see in London and Paris the working out of two different sets of governmental policies. In one country the national budget is balanced, social, labour and housing reforms have progressed slowly but effectively, building, labour and material costs are low. The result is an active building programme that provides a large volume of employment. In the other country there is no prospect of the national budget being balanced, radical reforms have been put into effect so quickly that industry has not been able to absorb them, and as a result costs have risen, consump- tion fallen off and unemployment increased. There is no incentive to build and the unemployment problem is thus greatly accentuated.

Outlook in New York City.

There

Let us turn to New York City. Here we find the same tendencies at work that have been observed both in London and Paris. It may well be that the future

industry and of the construction

of all American business will depend on the course to be followed. is a tremendous pent-up demand for new homes a d for good housing in New York and other America cities and towns. But this pent-up demand can b effectively held down and building indefinitely postponed by a continuation of such policies as we have seen illustrated in Paris. As to building credit, there is an ample supply on reasonable terms comparable with the best that England has to offer. As to confidence, it may be said that most Americans, although they may violently criticize the current party in power, still have a high faith in the future of America. The easy credit conditions now prevailing in the building industry may change if the national budget continues to be unbalanced, leading eventually to further devaluation as has taken place in France.

As to social and labour reforms, it should be obvious that these have progressed at too rapid a pace; but the present slowing down in giving business and industry a chance to absorb and assimilate the changes. Many of the recent demands of labour in the building industry have been unsound and destructive to business. In New York City the 30-hour week, the two-dollar-an- use of labour-saving hour wage, the restrictions on equipment are examples of the kind of labour demands that have effectively tied up construction in France.