In 1952, a non-profit making Hong Kong Settlers’ Housing Corporation (partly financed by Government) started building and selling small stone cottages in approved areas on hire-purchase terms.  Originally these cottages had no utility services, though communal latrines and water standpipes were provided.  Gradually these cottage areas came under the administration of the Resettlement Department, and new roads, paths, public lighting and latrine blocks were built.  Schools and welfare organizations were also incorporated into these areas. 

Despite the relatively inconvenient location, these stone cottages became very popular among the squatters and non-squatters alike.  However, the rate of construction was quite slow.  Also, there was a problem of available land for such a type of housing which had a relatively low density when compared with other types of housing.  To accommodate all squatters in this type of housing would require a considerable amount of land which Hong Kong could not afford.  By the 1970s, many of these areas had been reclaimed for development.