{"id":5095,"date":"2013-04-23T10:55:57","date_gmt":"2013-04-23T02:55:57","guid":{"rendered":"http:\/\/varsity.com.cuhk.edu.hk\/?p=5095"},"modified":"2022-11-17T14:56:06","modified_gmt":"2022-11-17T06:56:06","slug":"cost-of-living-property","status":"publish","type":"post","link":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/2013\/04\/cost-of-living-property\/","title":{"rendered":"Dream Homes out of Reach"},"content":{"rendered":"

Priced out in the world’s most expensive housing market<\/strong><\/p>\n

By Louie Cheng & Rachel Cheung<\/strong><\/p>\n

College graduate Man Yuk-ho has two jobs, shops for cheap clothes on the Chinese online shopping site Taobao, and seldom eats out. On the few occasions when she does eat out, she carefully compares the prices of various eateries beforehand and chooses the cheapest restaurant. She makes all these efforts for one purpose only \u2014 to save enough money to buy her first home.<\/p>\n

The 24-year-old graduated with a Higher Diploma in Journalism last year but failed to find a job related to her major. She ended up taking a teaching assistant job at a secondary school with a monthly salary of HK$9,300. In order to earn extra money, she also works part-time at a residential clubhouse and sells clothes online.<\/p>\n

Ho now lives with her mother and brother in a 300-square-foot public housing flat in Shek Kip Mei, where she shares a bunk bed with her mother. Like many other young people, she wishes to buy a private apartment and start a family, but she still has a long way to go.<\/p>\n

With the extra work and thriftiness, Ho manages to save HK$5,000 per month because she does not need to pay for family expenses at the moment. For a typical one-bedroom, 300-square-foot starter home in a Sham Shui Po high-rise, Ho would have make a down payment of HK$700,000 for a HK$3 million flat. At her present rate of saving, she would need to wait for at least 10 years.<\/p>\n

Cutting down on leisure expenditure is not the only sacrifice Ho has made for her future home. She is also forced to give up her dreams. She once dreamed of going on a working holiday after graduating from college, but she had to give up the plan because it would cost her too much in expenses and lost earnings.<\/p>\n

\u201cIt seems like right after your study you have to work, to save money, to a buy house. The whole thing is so boring. It\u2019s like we sacrifice our whole life to making a living,\u201d Ho says.<\/p>\n

Ho is just one of the many Hongkongers struggling with the city\u2019s sky-rocketing housing prices. Hong Kong consistently ranks top in surveys of the least affordable housing in the world. In January, the latest annual International Housing Affordability Survey by the respected US-based consultants, Demographia, showed the average housing price in Hong Kong is 13.5 times the local annual household income, which makes the city the most expensive place to buy a flat among big cities worldwide. In fact, Hong Kong has ranked first in the list for three years running. Other reports show Hong Kongers who do not qualify for public housing spend more than 40 per cent of their household income on housing.<\/p>\n

In order to cool down the property market, the government has launched a series of \u201cstrict measures\u201d in the past six months, including introducing the Buyer\u2019s Stamp Duty (BSD), a 15 per cent tax on property transactions imposed on non-permanent residents, extending and intensifying the existing Special Stamp Duty (SSD), and doubling the stamp duty for homes and non-residential properties which are worth more than HK$2 million.<\/p>\n

<\/p>\n

However, these policies have not brought much hope to young people like Chee Tsang, who feels it would be impossible to ever own her own flat. \u201c[I can only] prepare for the worst. I think it is a waste of time [to plan for buying a house], because the plan is impossible to work out anyway,\u201d she says.<\/p>\n

Tsang is 25 years old and works as an assistant manager in an IT professional organisation. She earns HK$16,000 per month and lives in a 500-square-foot Home Ownership Scheme flat with her mother. Every month, she pays HK$800 for the Mandatory Provident Fund, HK$7,000 to her mother for family outgoings, HK$5,000 for her personal expenses and HK$1,700 for insurance. Therefore, she can only save HK$1,500 a month.<\/p>\n

Tsang finds the gulf between people\u2019s incomes and housing prices is so huge that it is pointless to cut personal spending in order to save. She feels almost desperate about her generation as there seems to be little social mobility.<\/p>\n

\u201cMany people, like me, have already strictly followed the \u2018standard\u2019 [set up] by society. You study hard, enter universities, find a decent job, become a white-collar worker and work hard,\u201d Tsang says, \u201cBut even though you have done as the standard requires, you still cannot achieve your ideal life.\u201d<\/p>\n

Tsang says society has changed since her parents\u2019 days, when people would be able to afford their homes as long as they worked hard. Instead, she feels the most important key to a promising future nowadays is a person\u2019s family background.<\/p>\n

Tsang is hardly alone in holding such a view, but Legislator Paul Tse Wai-chun disapproves of negative attitudes towards the housing problem. At a Legislative Council meeting at the end of January, he said university students should have greater vision, instead of fixating on getting public housing. His comments sparked fierce debates among young people online.<\/p>\n

Tse believes housing is not a dire need for the young, \u201cIf you set your goal higher, you will walk towards your goal. If not, the only thing you see is the public housing flat, and you will only work for that,\u201d he says.<\/p>\n

Tse says, unlike the young in Western developed countries who would rather spend their money on education, travelling or other personal spending, Hongkongers always regard buying a home to be the most important and urgent task. He attributes this to a sense of insecurity, \u201cHong Kong does not have a complete welfare system, nor does it have a pension scheme. This leads to people\u2019s anxiety about their future.\u201d<\/p>\n

In order to alleviate the housing problem young graduates face, the government recently proposed a scheme to turn vacant schools into youth hostels aimed at the working population aged 18 to 30. Successful applicants can stay for at most five years. However, they would be barred from the waiting list for public rental housing. This has discouraged many people from applying.<\/p>\n

Apart from young graduates, there is another group of people who have great trouble purchasing their first homes. They earn more than the grass roots and so are excluded from both public housing and the Home Ownership Scheme. However, due to the high property prices, they are unable to afford private flats either. They are the lower middle class in Hong Kong, commonly referred to as the \u201csandwich class\u201d.<\/p>\n

<\/p>\n

Earlier this year, Finance Secretary John Tsang Chun-wah\u2019s 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 \u2014drinking coffee and watching French movies.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

Tong believes the current policies in Hong Kong are unfair to the middle class. \u201cWe 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,\u201d she says.<\/p>\n

The problem of Hong Kong\u2019s high housing prices is structural and linked to the government\u2019s 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\u2019s housing problems, explains: \u201cThe government\u2019s fiscal revenue relies heavily on the profits from land sales, thus we don\u2019t think this policy will be changed in the foreseeable future.\u201d<\/p>\n

There are also external factors. Loong says Hong Kong\u2019s 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.<\/p>\n

The Hong Kong dollar\u2019s 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.<\/p>\n

In Loong\u2019s 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. \u201cThe 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,\u201d he explains. \u201cIt should at least take the relationship between the flat and its community [into account] when a new flat is built.\u201d<\/p>\n

<\/p>\n

Loong feels that people\u2019s lives have become constrained by high property prices. Even if they manage to afford the down payment, they still need to make the mortgage payments. Therefore, they are afraid of being fired by their bosses and do not dare to take risks.<\/p>\n

\u201cIt is time to reflect on the \u2018success formula\u2019 of the old generation,\u201d says Loong. He does not believe the young generation in Hong Kong is short-sighted or lack ambition. Rather, he thinks it is the objective reality that hinders their freedom to explore different possibilities in life like their counterparts in Western countries.<\/p>\n","protected":false},"excerpt":{"rendered":"

Hong Kong consistently tops lists of the world’s most expensive city for accommodation. The cost of land and property fuels rising rents, and prices for goods and services and despite various market-cooling measures rolled out by the government, many people remain priced out of the market.<\/p>\n","protected":false},"author":2,"featured_media":5143,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[200,1983,7],"tags":[195,66,196,40],"class_list":["post-5095","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-april-2013-an-inhabitable-city","category-issue-128","category-periscope","tag-economy","tag-property","tag-sandwich-class","tag-society"],"_links":{"self":[{"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/posts\/5095","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/comments?post=5095"}],"version-history":[{"count":11,"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/posts\/5095\/revisions"}],"predecessor-version":[{"id":5489,"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/posts\/5095\/revisions\/5489"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/media\/5143"}],"wp:attachment":[{"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/media?parent=5095"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/categories?post=5095"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/varsity.com.cuhk.edu.hk\/index.php\/wp-json\/wp\/v2\/tags?post=5095"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}