Downwardly mobile

PUBLISHED : Monday, 14 March, 2011, 12:00am
UPDATED : Monday, 14 March, 2011, 12:00am

Some months back I told you about how I let loose the foulest expletives you can imagine when my neighbour told me he had been hit with a non-negotiable 25 per cent rent rise. He could not afford it and moved. I knew then I, too, would soon be hit since it is the same landlord.

The blow has just landed. My rent is going up by more than 25 per cent after just one year. I have a week to decide, after which it could climb even higher. No bargaining. Pay up or get out. The landlord is a big-time developer who only offers a maximum one-year lease, after which tenants face huge rent increases. If my income had also gone up 25 per cent over the year, I would grudgingly agree to put this extra money in his pocket. But it has not, not even close. If I pay up, I will be poorer but I will be making my landlord richer than he already is. And if I do stay, I will probably face another 25 per cent rise next year unless the market crashes.

When you next wonder why Hong Kong has one of the widest rich-poor gaps in the developed world, just think about what happened to my neighbour, what is now happening to me, and to countless others every day. I would accept this widening wealth gap as a distasteful side of capitalism if it was a case of the rich getting richer far faster than poorer people. But that is not what is happening. Our poor are not climbing the wealth ladder, they are tumbling down it. I am neither rich nor poor, just one of the many faceless middle-class people priced out of the property market and therefore at the mercy of our landlords. Mercy may be the wrong word to use. Our landlords do not know what it means. My choice is to stay and live beyond my means or move further down-market for the rent I now pay. Either way I lose. Aren't governments supposed to create an environment for the people to move up rather than down in the world? So how come in the past few years my flats have been shrinking in size but my rent has been ballooning?

Owning a flat is not a must for me as it is for most Hongkongers. But it depresses me to know my pay increases - or anyone else's for that matter - will never match the absurd leaps in Hong Kong's rents. I will forever be sliding down the upward mobility ladder - paying more and more of my income for tinier and tinier flats in lousier and lousier areas.

Chief Executive Donald Tsang Yam-kuen said some time back there are still good deals in the remoter parts of the New Territories. Let's do a reality check on that. Cheung Kong last week paid HK$2.4 billion for a Yuen Long site which came with the sale condition that it must build small, no-frills flats to make them affordable. But, the reality is, for Cheung Kong to make a reasonable profit, it must sell the tiny flats - with actual living space that starts from below 400 sq ft - for over HK$3 million. A no-frills cubicle in remote Yuen Long for HK$3 million - that is the new definition of affordable in Hong Kong. Get used to it.

The violent street protest just over a week ago showed that not everyone wants to get used to it. The thousands who turned up were protesting against the budget, which they saw as lacking in any vision to deal with pressing issues such as the wealth gap. A central theme was surging property prices that have locked many out of the market. If there is one thing that is widening our wealth gap, it is the property market. Just look at the latest Forbes list of the rich. Our richest people are all property developers. As prices surge, our 1.2 million homeowners are getting richer by the day, if only on paper, unless they sell. Those who do not own property have to pay a higher and higher part of their income to landlords.

I cannot understand why the government refuses to restart subsidised home sales, even though surveys show most people support the plan. Don't tell me it is because our leaders dance to the tune of the developers who oppose any measures that will bring down home prices. I already know that. What I do not know is how much longer the government thinks the people can tolerate being squeezed. Last week's angry protest was a tremor. Surely, an eruption awaits us somewhere down the road.

Michael Chugani is a columnist and broadcaster