'Sky-high' housing still within reach for some

PUBLISHED : Wednesday, 09 February, 2011, 12:00am
UPDATED : Wednesday, 09 February, 2011, 12:00am

Hong Kong's sky-high property prices are unmatched the world over, but there are people who still find them affordable.

Many complain that wealthy mainlanders have pushed up the city's housing prices. However, statistics show that mainlanders only accounted for 30 per cent of luxury property transactions last year; the remainder was snapped up by locals.

In a recent press report, Polytechnic University president Timothy Tong Wai-cheung said local property prices were so high that even he couldn't afford to enter the market, adding that the city's greatest weakness was its inability to rein in housing prices. To illustrate his point, Tong said the average price of a Hong Kong flat of approximately 700 sq ft was equivalent to that of a house 10 times that size in the United States.

As a respected figure in academia, Tong's words carry a lot of weight, and therefore he must be careful about what he says. It's a fact that local university presidents are paid more than their counterparts overseas.

Tong receives a monthly salary of at least HK$450,000, so there is no reason he can't afford a property in Hong Kong. The prices are already unbearably high, and what he said will only fuel the growing anti-rich populist sentiment.

Tong is more than qualified to buy a local luxury property costing HK$10 million. To say that buying an average property is beyond his means gives the impression that the city's property market is out of control to the point of collapse.

I respect Tong immensely, but I do expect him to understand that a teacher's influence is often lasting. What he said could deepen anti-rich sentiment among young people. He should have reminded them that they are the makers of their own fate and encouraged them to work hard for a better future. Sadly, he failed in his duty here.

He was wrong in trying to draw parallels between the prices of properties here and in the US. It is true that prices are much higher here, but Hong Kong is a small place, and therefore land values are at a premium.

On top of that, we also have internal and external demands relentlessly pushing prices up. This is a natural phenomenon in any free-market economy in which supply and demand lead the way. In the US, property prices also differ from place to place due to differences in demand, supply, location and market structure.

We will always come across people, such as financial analysts, who try to defend the high property prices and keep them that way. One such person is Eric Wong Chun-yu, co-head of Asian property research at Swiss investment bank UBS, who predicted that local asset prices would continue to rise in the near future. He advised those who couldn't afford to buy in Hong Kong to live elsewhere and allow others, who could, to join the market. He should be criticised for making such an offensive suggestion.

Our housing crisis is not about prices but the provision of homes. Buying a property is a personal investment choice and, of course, it also depends on affordability.

One interesting example is the case of Tanya Chan Suk-chong, who receives a monthly salary of about HK$70,000 for her role as a legislator. On such a salary, she is financially able to buy a starter home, but she chose to rent.

Chan decided only recently to save up a down-payment for a home because of her unpleasant experience last year of being evicted by her landlord.

Many Hongkongers prefer to buy property on the mainland and live there after they retire because they can get better value for money. Property investment is about choice and budget, and will never be restricted by borders.

Albert Cheng King-hon is a political commentator. taipan@albertcheng.hk