Earlier this year, Finance Secretary John Tsang Chun-wah’s self-identification as a member of the middle class triggered popular indignation. Despite being paid more than HK$300,000 a month, Tsang defines himself as a member of the middle class because he thinks he shares their lifestyle as he sees it —drinking coffee and watching French movies.
Unlike Tsang who owns properties both locally and overseas, members of the sandwich class are still struggling to purchase their first flat. And yet, they are often ignored by the government which makes few policies favourable to them.
Tong Wai-ying, who is in her 50s, works as a saleswoman at the airport. She earns a monthly salary of HK$20,000 and lives with her 20-year-old daughter in a village house in Lam Tin Tsuen, Tsing Yi. She rents the 300-square-foot unit for HK$4,000 per month. A similar unit in say, Mong Kok, would cost around double that amount.
Tong can barely save anything every month. The rent, transportation costs and other daily outgoings for herself and her daughter take up most of her monthly income. Her daughter is still in college and Tong gives her HK$3,000 per month as pocket money.
Tong has always longed for her own flat, but the increases in her salary cannot keep up with the soaring housing prices. She wishes to buy a subsidised flat, but she does not dare to take the risk of switching to a lower-paid job in order to qualify to apply. She also considered lining up for the first My Home Purchase Scheme project in Tsing Yi, but in the end she gave up because she did not have enough savings to cover the down payment.
Tong believes the current policies in Hong Kong are unfair to the middle class. “We make an effort, we go to work, we support ourselves and pay taxes, but still I cannot find my own residence. I have to use a big part of my salary to rent a place to live in,” she says.
The problem of Hong Kong’s high housing prices is structural and linked to the government’s high land price policy, which has been in place since colonial times. Loong Tsz-wai, the chief development officer of the Community Development Initiative, who has conducted extensive research into the city’s housing problems, explains: “The government’s fiscal revenue relies heavily on the profits from land sales, thus we don’t think this policy will be changed in the foreseeable future.”
There are also external factors. Loong says Hong Kong’s open economy makes the city a prime target for international cash flows. Since hot money is in search of investment and profit, the local property market becomes the easy choice which leads to increasing property prices.
The Hong Kong dollar’s peg to the US greenback also means that interest rates dropped after successive rounds of quantitative easing in the US, further adding to the attractiveness of the housing market and raising prices.
In Loong’s opinion, the government is too short-sighted when it comes to addressing the housing problem. It only takes action when the situation has already become very serious. “The land policy actually requires long-term planning, and it should not only focus on the numbers such as how many flats will be built or taken apart,” he explains. “It should at least take the relationship between the flat and its community [into account] when a new flat is built.”