Donald Tsang

Running on the spot

PUBLISHED : Monday, 31 January, 2011, 12:00am
UPDATED : Monday, 31 January, 2011, 12:00am


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If you're middle class, have a good job, have worked half your life and are now ready to buy a home that matches your status, forget it. You won't be able to afford anything that comes even close to your middle-class standing unless you have a long-lost uncle who left you a bundle.

You need a cool HK$10 million for a 691 sq ft flat with actual living space of 400 sq ft at The Icon in Conduit Road. Your HK$10 million will get you two closet-sized bedrooms to squeeze in your wife and children. I wouldn't exactly call Conduit Road an upscale area but it's still too classy for middle-class folks like you.

Lower your sights, as Chief Executive Donald Tsang Yam-kuen advised some months back. If you look hard enough, you might still find HK$3 million flats in the more remote parts of the New Territories. They're pigeon-hole-sized but a bargain at HK$3 million. Your middle-class family will just have to settle for that as your dream home.

Once you've got your pigeon-hole-sized dream home, your next task is to switch sides. Instead of cursing the government for doing nothing about unaffordable home prices, you have to curse the government for doing something about it. As a homeowner you want the market to remain sizzling hot with speculators, greedy landlords and unscrupulous developers driving up prices. Within a year or two, your HK$3 million pigeon-hole-sized flat could be worth HK$4 million.

That'll make you feel rich, but you'll still be trapped in that tiny flat. That's because larger flats worth HK$4 million when you bought your HK$3 million home will have become HK$5 million. So forget about that HK$10 million cubicle in Conduit Road. With the insane way prices are now climbing, it will be selling for HK$15 million in a few years. You'll never catch up. Don't believe me? Then ask legislative councillor Lee Wing-tat. He earns over HK$60,000 a month as a legislator but told me all he could afford was a modest flat way out in Tuen Mun.

Our government openly gushes with pride every time international surveys name Hong Kong as the world's freest economy. Last week, an international survey named Hong Kong as having the world's priciest property market. Our government didn't gush with pride. In fact, it didn't say anything. Does its silence suggest that having the world's priciest property market is nothing to be proud of? Maybe it is afraid people may think it immoral that it helped home prices reach such heights when it has done nothing about Hong Kong having 1 million poor people.

The survey found that the median home price is now more than 11 times the median annual household income. I'm terrible with figures, but it sounds insane. How many average Hongkongers can afford those prices? I know I can't.

Some months ago, the chief executive told me on television that Hong Kong people don't want property prices to come down. Executive councillor Leung Chun-ying, who wants to become the next chief executive, told me on television last week that the government shouldn't bring prices down.

Our leaders worry that falling prices will erode the wealth of homeowners. The property market crash some years ago that plunged many homeowners into negative equity still haunts them. But I've never understood this logic. A homeowner with a HK$3 million flat that is worth HK$4 million two years later is not richer by HK$1 million unless he sells up and sleeps on the streets. Negative equity becomes a reality only if the owner sells, not if he continues to live in the flat.

But to protect their paper wealth - I call it greed, because the wealth grew from a speculative market - the government shuts the door to others priced out of the market. Is that fair? Leung says that, instead of bringing prices down, the government should help those priced out of the market with subsidised homes. Do we want a future Hong Kong where only the rich can afford to buy flats, the poor are herded into public housing, and the rest can only aspire to subsidised homes?

Michael Chugani is a columnist and broadcaster