As Hong Kong’s housing affordability crisis persists, policymakers and experts alike are revisiting bold proposals. One suggestion gaining traction is to allow Mandatory Provident Fund (MPF) contributions to be used for property purchases. This idea isn’t without precedent — Singapore’s Central Provident Fund permits such flexibility, enabling citizens to use their retirement savings to buy homes. But is such a move right for Hong Kong?

Hong Kong’s property market has somewhat cooled down in recent years. While introducing a program to let MPF savings support home purchases may not reignite the housing boom, it could increase risks, particularly if it enables financially vulnerable individuals to enter the market.

Consider the numbers. According to the MPF Authority, the average MPF balance stands at approximately HK$250,000 ($32,200). For a couple, this amounts to around HK$500,000 — enough to make a significant down payment. Hypothetically, they could use these funds to secure a 90 percent mortgage on a HK$5 million flat. However, if the market dips further or buyers struggle to keep up with mortgage payments, they could face foreclosure, forced sales, or even financial ruin — all while compromising their retirement savings.

To mitigate these risks, any MPF-for-housing policy would need strict safeguards. For example, borrowers should be required to make a minimum down payment of 30 percent without relying on mortgage insurance. Another option would be to launch a pilot program, initially allowing MPF funds to pay off existing mortgages rather than fund new purchases. This approach could ease financial burdens for existing homeowners while providing a test case for broader implementation.

Singapore offers valuable lessons. Its CPF system, with a combined contribution rate of 37 percent (compared to Hong Kong’s 10 percent), is more robust and versatile. Singaporeans can use CPF savings for housing, healthcare and other essential expenses, making homeownership a viable goal for many.

In contrast, Hong Kong’s housing system creates significant barriers. The lack of affordable housing often forces young people into a “wait and stagnate” mindset — forgoing promotions to remain eligible for public housing or deliberately capping earnings to avoid being labeled as “well-off tenants”. This perpetuates inequality and stifles ambition, creating a sense of hopelessness among those striving for upward mobility.

A well-designed MPF housing program could restore hope. By providing young people with a clear path to homeownership, it may reduce dependence on public housing and encourage a more aspirational society.

As policymakers weigh the pros and cons, one thing is clear: Hong Kong must explore innovative solutions to its housing crisis. An MPF housing program is not without risks, but with careful design and prudent implementation, it could become a valuable tool in the city’s ongoing quest to make homeownership an achievable dream.

Critics argue that allowing MPF funds for property purchase undermines its core purpose: retirement security. This concern is valid. MPF is fundamentally a savings and investment mechanism meant to provide financial stability in old age.

Redirecting MPF funds into housing risks eroding retirees’ financial safety net.

However, the counterargument is compelling. Real estate and equities — two primary forms of investment — both carry risks. While stock markets are known for volatility, property investments offer tangible, long-term benefits. For instance, long-term tenants who use MPF savings to purchase homes may find themselves better off in retirement, having paid off their mortgages and eliminated rental costs.

It’s worth noting that other places, such as Macao and the Chinese mainland, already allow residents to use retirement savings for property purchases. Denying Hong Kong residents this choice not only restricts their financial freedom but also protects entrenched interests in the housing market.

To avoid destabilizing the market, policymakers must ensure any MPF housing initiative is designed with precision. For example, restricting it to first-time buyers or requiring a multiyear investment horizon could reduce speculative risks. Additionally, ensuring buyers have sufficient resources beyond their MPF balances to cover unexpected financial challenges is critical.

Chief Executive John Lee Ka-chiu’s administration has taken significant steps to address housing challenges, from streamlining land supply to promoting the Light Public Housing program. A well-thought-out MPF housing policy could complement these measures by providing a sustainable route for aspiring homeowners to step onto the property ladder.

The broader question remains: Should Hong Kong’s housing problems be solved through market interventions or structural reforms? Allowing MPF savings to fund property purchases is not a panacea. It won’t resolve land supply issues or eliminate the speculative forces that drive prices upward. However, it can offer a practical, interim solution to ease financial pressures and restore hope to those left behind by the current system.

At its core, the MPF represents personal savings — money belonging to the individuals who contributed it. Giving residents more control over how these funds are used aligns with the principles of financial autonomy and market freedom. With robust safeguards in place, the policy could strike a balance between short-term economic relief and long-term retirement security.

As policymakers weigh the pros and cons, one thing is clear: Hong Kong must explore innovative solutions to its housing crisis. An MPF housing program is not without risks, but with careful design and prudent implementation, it could become a valuable tool in the city’s ongoing quest to make homeownership an achievable dream.

The author is chairman of the Asia MarTech Society and sits on the advisory boards of several professional organizations, including two universities.

The views do not necessarily reflect those of China Daily.