Small flats, big prices, bigger disappointment
Middle-income earners hoping that government exhortations to developers to build more smaller, affordable flats will bear fruit are in for a disappointment.
While many such flats are small, their prices are not, ranging from under HK$3 million to nearly HK$8 million and with mortgage repayments that can eat up as much as 80 per cent of the median household income.
The cheapest home the Post could find among small new flats released for sale this year costs HK$2.5 million and offers saleable space of just 270 square feet - smaller than many hotel rooms. At the top of the range is a flat with 370 sq ft for HK$7.8 million.
'You have to go into debt for your entire life for a tiny living space. What kind of life are we facing?' asked Paul Yip Siu-fai, a professor who specialises in population and mental health issues at the University of Hong Kong.
While smaller flats cost less than bigger ones, their prices per square foot are at the upper end of the market, ranging from HK$8,000 to HK$21,000 in terms of saleable area and HK$6,000 to HK$15,000 in terms of gross floor area.
'The flats are small but expensive. This is unhealthy,' Democratic Party legislator Lee Wing-tat said.
Since Chief Executive Donald Tsang Yam-kuen used his policy address in October to urge developers to build more small and medium-sized flats, government officials have said they will liaise with developers, including the Urban Renewal Authority and the MTR Corporation, to increase the supply of such homes.
Transport and Housing Bureau figures released last week show that 58 per cent of the 61,000 private flats which will become available in the next four years will be small to medium-sized. The Rating and Valuation Department defines a small flat as one of up to 430 sq ft and a medium- sized flat as being up to 750 sq ft.
At least eight developments which have come on the market in the past six months have included flats in these two categories, but they are not cheap.
The cheapest flat we found -at HK$2.5 million for 270 sq ft - is in the Lime Stardom development in Tai Kok Tsui, a project co-developed by the Urban Renewal Authority and Sun Hung Kai Properties.
The HK$7.8 million, 370 sq ft flat - among the most expensive to have gone on sale recently - is in Island Crest, another project the authority co-developed with Kerry Properties.
In between are flats of 301 sq ft, dubbed studios, that are for sale in The Hermitage in Tai Kok Tsui for HK$3.9 million to HK$4.7 million.
If a buyer took out a 20-year mortgage for 70 per cent of the value of the Lime Stardom flat at an interest rate of 2 per cent, the monthly repayments would be around HK$9,000. For a mortgage on the same terms for a flat priced over HK$4 million, the owner would have to pay more than HK$15,000 a month, close to the median monthly household income of HK$18,000. And monthly repayments on a loan for the HK$7.8 million flat would be HK$28,000.
In April, when prices in some large estates passed their 1997 peak, Secretary for Transport and Housing Eva Cheng highlighted the supply of small to medium-sized flats in a bid to address public concern about increasing flat prices.
In February, Financial Secretary John Tsang Chun-wah said in his budget that the government would, for the first time, require developers tendering for a site in Long Ping to build smaller flats. It would also liaise with the MTR and Urban Renewal Authority to increase the supply of smaller flats.
The authority, which is committed to building smaller flats in a Ma Tau Wai project, now says it will reduce the size of flats at Yu Lok Lane, Sheung Wan, to less than 500 sq ft.
Yip, the population academic and a government adviser on policy, said studies showed rising demand for housing from people in their twenties and thirties but the small flats available to them were too pricey.
'The increasing number of university students queuing for public flats is a bad sign,' he said. 'They are simply giving up hope of moving into a private flat.'
Housing Authority figures show the number of single people under 30 waiting for public flats has increased by 60 per cent in the past four years, from 13,400 in 2006 to 21,300 last year.
'We are facing two extremes. Those who cannot afford luxurious apartments will have to live in public flats,' Yip said.
Law Chi-kwong, a social sciences professor at the University of Hong Kong, said: 'Government policy should not seek to shrink the living space of its people. It does not match with Hongkongers' expectations.'
Small flat, big gap
The lowest price per square foot the Post found was: $7,900
The highest per square foot was: $21,000