Choice of the '80s generation - holidays or a home of your own

Young people can save or travel: but if they save, will they ever have enough to buy a home?

PUBLISHED : Tuesday, 05 March, 2013, 12:00am
UPDATED : Tuesday, 05 March, 2013, 4:42am

Travelling overseas on holiday once or twice a year has become a habit for many Hongkongers born in the 1980s, while at the same time they complain about skyrocketing flat prices that make it difficult for them to afford a home.

I am part of that generation, and surrounded by friends of the same age with the same pastimes and woes, I am well aware of the debate: should one indulge the travel bug or save money to buy a flat?

"If you saved what you spend on travelling for buying a home instead, you can become a flat owner sooner" - this is common advice from the older generation, who would invariably add that when they were young, they had no entertainment and saved every penny for their first apartment.

It is true that the more money you save, the better chance you have of affording a flat.

But how much can a person save if she spends all her holidays in Hong Kong? And why does the younger generation travel so often?

Judging from friends' experience, many Hongkongers now make about two short-haul trips on average a year to popular destinations such as Taiwan, Thailand and South Korea. Otherwise, they may make a long-haul trip to Europe or North America.

That could cost, from HK$15,000 to HK$30,000 a year, depending on the destinations and length of the trips. Over a 10-year period, that would amount to between HK$150,000 and HK$300,000 - 5 to 10 per cent of the price of a HK$3 million flat.

However, Hong Kong's home prices nearly tripled in the past 10 years, according to the latest Centa-City Leading Index, which rose to 121.64 last week from 41.36 a decade ago.

If home prices continue to soar at this rate, a HK$3 million flat will cost almost HK$9 million 10 years from now. So if you saved up HK$150,000 to HK$300,000 by foregoing trips abroad, you would have amassed only 1.7 per cent to 3.4 per cent of the price of a flat.

"It seems impossible to buy a flat no matter how much I save, unless my income grows significantly or flat prices come down drastically - both of which seem impossible anyway," sighed a 29-year-old friend who earns HK$22,000 a month.

"I really like travelling, and I don't want to be a slave of a 350-square foot apartment and get stuck in Hong Kong in the next 30 years," she said.

"Otherwise, by the time I finish paying for the flat, I may be too old to travel and will still be stuck in that small unit for the rest of my life."

While she may have exaggerated a little, her reasoning does make sense. Some journeys can be eye-opening or emotionally uplifting for those who suffer from the pressure of a hectic work life in Hong Kong. And there are some places and adventures a person can experience only when young. Places with extreme weather or a long flight from Hong Kong, for example South America, might be more challenging for elderly people.

Travelling is not cheap, and neither is buying a flat in this city. I guess we have to make a choice or, if we want to do both, a compromise. Would travelling less and staying in hostels or budget hotels be a satisfactory option for you?

If you still think that won't be of much help and you prefer to give up the home-ownership dream, try to see the positive side. Failing to become a homeowner but being able to travel worldwide, you may already be living an upper-class life - better than Financial Secretary John Tsang Chun-wah's "middle-class" lifestyle of drinking coffee and watching French movies.