After the Shek Kip Mei fire, the government promulgated a housing act in April 1954 with the aim of making long-term improvements to the living environment of low-income families. The legislation established the semi-independent, the former Hong Kong Housing Authority, which was given the task of developing low-cost housing projects.

An early example of low-cost housing in Hong Kong, So Uk Estate was the third public housing estate to be built by the then Housing Authority. The Estate was constructed between 1955 and 1963, costing over HK$50 million to build. It was described as the largest integrated residential development project in Asia. The monthly rent for a four-person unit ranged from HK$48 to HK$66 and so was slightly higher than the rent on the counterparts of resettlement estates, but public facilities including shops, schools, post offices and ample open space were provided to promote the establishment of a local community. The environment that was created came to nurture a number of local performing artistes: Michael Hui and his brothers, Wong Ka Kui and Wong Ka Keung of the band Beyond and Dominic Lam all grew up in these neighbourhoods.

Voluntary organisation also became actively involved in the development of low-cost housing during the 1950s, such as Sheng Li Uk Estate, the first “rental estate” developed by the Hong Kong Housing Society, and Tai Hang Sai Estate, a private housing estate that was funded by the Hong Kong Settlers Housing Corporation Limited. These developments showed that private low-cost housing was viable complement to government projects in the efforts to cope with the rising demand for housing.