Big spender's guide to Hong Kong
How much do you actually pay for your cars, pets and children? Tiffany Ap does the maths
Everyone knows Hong Kong is an expensive town. But you might be surprised by the total costs for even generic expenditure, such as owning a dog. The cost of owning a car or raising a child takes things to another, stratospheric, level altogether. The following is not for the timid. Money is earned and it must be spent. But it's always good to go into transactions involving large recurring expenses with one's eyes fully open.
Dollars for collars
The good news is that getting a dog is not necessarily expensive - in fact they are usually free. You can adopt from shelters including the SPCA and Hong Kong Dog Rescue, although you may not get your first choice of breed or sex. But the price is right and the dog comes licensed and up to date with shots.
From there, the big cost is food. You can expect to spend HK$10 to HK$20 a day depending on the size of the dog. Small breeds often live past 15 years. A larger dog's life expectancy is shorter - around 10 years - with some of the largest pedigrees like mastiffs living only about six to eight years. Assuming you pay HK$15 a day for food and your dog lives a full decade, you can expect to pay about HK$55,000 just filling your beast's tummy.
Dogs can also rack up surprisingly large medical bills. Bob McKercher, who has owned 10 dogs, says: "You can expect that a dog will need medical care at some point. Dogs get sick." Last year, two of McKercher's Pekingeses required surgery. One called Lady had bladder stones surgically removed and was neutered at the same time. The bill was HK$5,000.
His other dog Donna suffered a seizure which required several nights in a vet hospital as well as surgery to remove what they thought was a cancerous lump on the liver and neutering. The total cost for everything relating to that emergency came to morethan HK$9,000, including emergency vet fees, hospital charges and surgery.
You'll likely pay more for your dog's medical consultations than your own. A standard veterinarian visit runs to about HK$250 (compared with an average HK$150 for a person to see a doctor). An emergency consultation after-hours or during holidays is about HK$800 to HK$2,000. Cataract surgery for a dog costs an average of HK$11,000 to HK$20,000, according to Tom Mangan, president of the Hong Kong Veterinary Association.
Then there is generic treatment and shots. A puppy gets three vaccinations, after which there is a yearly booster. Most vets charge about HK$250 for each shot. Assuming a dog lives for 10 years, that's HK$3,000 on shots alone.
At six months, veterinarians recommend desexing, which helps eliminate several health problems and, of course, the possibility of an unexpected litter of puppies. The procedure for a small male starts at about HK$500 while a large female can set you back HK$1,500.
It doesn't end when your dog dies. Owners can dispose of the body through a government service (HK$400 for a small breed, HK$600 for large). Another option is cremation. Pet's Heaven provides individual cremation including pickup service and an urn, charging up to HK$2,800.
The total cost for owning a mid-sized dog taken from a shelter that lives 10 years: about HK$67,000
Cars are a massive expense. The upfront payment is huge, and the ongoing costs are hefty, too.
The bestselling car in Hong Kong last year was the Mercedes E-Class whose 2012 model starts at HK$474,000. A cheaper alternative is the Volkswagen Golf. A new model costs HK$239,000. Buying a new car in Hong Kong is considerably more expensive than in the United States owing to taxes, but it is still much cheaper than in Singapore and slightly cheaper than having a car on the mainland.
The cost of a vehicle licence depends on the size of the engine but falls between HK$2,929 and HK$15,976 a year. It can be paid either quarterly or yearly, which gives drivers a slight discount.
Drivers also need insurance, of which there are two types: third party and comprehensive. Third-party insurance will cover the costs of damage to other vehicles and passengers in your car but excludes the owner and the owner's car. A comprehensive plan will, just as it sounds, cover just about everything.
James Kong, vice-president of the Hong Kong Automobile Association, estimates that a driver over the age of 35, with at least two years of experience, driving a HK$250,000 car, would probably pay about HK$13,000 for comprehensive coverage and less than HK$2,000 a year for third-party insurance.
Fuel expenses will also vary widely, depending on the vehicle's size and fuel efficiency. Unleaded petrol is about HK$17 per litre while a more premium fuel will cost about HK$18 per litre. It costs about HK$848 to fill up the tank of Toyota Corolla, which is a good benchmark for estimating weekly gas expense.
Then there's parking. In less busy districts such as Sai Kung, rates are as low as HK$10 an hour, whereas most car parks in Central charge about HK$30 an hour.
A permanent parking space will cost a pretty penny, especially given the incredible investor interest in parking spaces of late. In Hong Kong, these spaces have separate ownership titles from apartments. The average price of a previously owned parking spot in residential complexes in the fourth quarter of 2012 was HK$640,000 according to property agency Centaline. A parking space in Repulse Bay sold for HK$3 million last year.
Owners should see to it that their cars get an annual servicing, which will take care of general wear and tear. "It's changing things like filters and fluids, fan belts, wiper blades, and brake pads," says Stuart Busby of HP Motors.
To get an idea of maintenance costs, a service for a Toyota Corolla costs about HK$4,000. Luxury cars are not much more expensive in this respect. A Mercedes E-class general servicing would be about HK$5,500. Meanwhile, tyres should be replaced every 20,000 to 30,000 kilometres. Mid-range tyres cost HK$700 each.
Replacing electronic parts is substantially steeper than mechanical parts, says Busby and this is where owning a luxury car can get expensive. Most luxury features involve electronics - electric seats, seat warmers, sunroofs - so the more heavy the reliance on electronics, the higher the repair costs will be.
Owners who are interested in cutting back on expenses should choose a popular car. "British cars like Jaguar and Land Rovers are expensive to repair because there aren't that many of them here," Busby says. "With Japanese cars, as well as BMWs and Mercedes - which are plentiful - there are companies other than the dealers who can get parts from overseas. If you have a car that's not popular, no one stocks the part other than the main dealer and they'll charge a lot of money."
Total cost for owning a second-hand Toyota, including fuel, insurance, parking and maintenance for five years: about HK$626,000
Drop the bundle
This is the big one. In 2006, Hong Kong's Olympic windsurfing champion Lee Lai-shan raised eyebrows when she said in a Hang Seng Bank television commercial that it would take HK$4 million to raise a child in Hong Kong. While there are no official numbers, estimates by insurance companies, banks and other firms that sell education investment funds to middle-class families put the total costs of bringing up a child between HK$3 million and HK$4 million.
The cost varies depending on parenting style. A good baseline comes from the Adoption Unit of the Social Welfare department, which will only consider couples with HK$21,000 in monthly spare cash flow (income after rent, bills and helper costs). The department presumably sees HK$21,000 as a baseline budget for raising a child in Hong Kong.
The good news is that the department sees economies of scale in child rearing: it only looks for spare monthly income of HK$26,800 to adopt two children, and HK$35,300 for three children. A second child can easily share a room with the first-born and use hand-me downs. Strollers and car seats can be reused while food and other daily items can be bought in bulk.
Pamela Ho is a mother with a three-month-old daughter. She delivered her daughter at the private St Teresa's Hospital at a cost of HK$55,000.
Ho tries not to get stressed about the financial commitment of raising a child. Her older sister feels the pressure more. "It's why she doesn't have any kids," Ho says. "She loves them and if she does have them, she says she'll just have one. Part of it is the overall commitment but it is also the financial burden."
By far the largest single expense for Hong Kong parents is education. Preschool education is not free and there is an astounding range in fees. Most local kindergartens charge between HK$1,500 and HK$4,000 a month. International kindergarten tuition costs from HK$70,000 to more than HK$170,000 a year.
Primary and secondary education is offered free via the public school system but, again, there is a wide range for private schooling. Most private primary schools charge HK$50,000 to HK$60,000 a year. ESF schools cost HK$100,000 at the secondary school level, while fees for international schools rise to as much as HK$170,000 a year. You can add to that the seemingly endless related expenses such as books, uniforms and pricey field trips.
Most Hong Kong parents also provide for their children's university education which is another HK$75,000 to HK$120,000 per year. Studying in Britain or the US can easily double that number.
The good news is there is a public, subsidised option for all your child's main needs. Hong Kong public hospital maternity wards are good and cheap, public-school primary and secondary education is free and fees at local universities are heavily subsidised. Parents enter into something of an arms race - only by outspending other parents on things like schooling, tutorials and university can one expect little Johnny to outperform his peers, or so the thinking goes.
But if parents de-escalate the arms race and rely a little more on public services, they can radically minimise their expenditures.
Total cost for raising a child to 18 years of age assuming he or she uses government subsidised services (schools, hospitals, clinics, and so on) for all years: HK$2 million.
And the rest
There are far too many expenses connected to child rearing to fully list here.
But consider the "start-up costs", or the essential items you will need for your precious bundle's first year.
- Most people find a helper essential so that's a commitment of HK$3,920 per month in wages.
- You will need a pram (about HK$3,500 for a good one), a bottle steriliser (HK$300), bottles (HK$400), crib (HK$1,500), sheets and sleeping blanket (HK$2,400), bassinet (HK$900), basic set of clothes (at least HK$1,600), baby tub (HK$300), nursing bras (HK$900), breast pump (HK$1,500), baby carrier (HK$1,000) towels (HK$50) … the list goes on and on.
- You can expect to be visiting the doctor frequently. Emergency consultations can cost from HK$500.
- Diapers will cost about HK$500 a month and milk formula will drain about HK$1,000 a month from your account.
And the rest
Dog owners will rack up a series of small-item expenses.
- At five months, you need to protect against heartworm, a disease carried by mosquitoes, with either monthly tablets (HK$380 to HK$500 for a 12-month supply) or a yearly injection (HK$400 to HK$800). Heartworm is easily prevented but costly to treat.
- Flea and tick prevention will cost about HK$360 a month.
- At five months, puppies need a rabies shot in addition to getting micro-chipped (a chip is inserted behind the dog's ear that identifies the animal) and licensed by the Agriculture, Fisheries, and Conservation Department, for HK$80. Owners have to renew the licence and the rabies shot every three years. It costs HK$40 per renewal. Most veterinarians will charge upwards of HK$200. Owners who don't renew their dog licence can face a fine of up to HK$10,000.
- You will no doubt also be splashing out on accessories such a s leashes, collars, clothes, toys and treats. Just for reference, Puplicity, located on Elgin Street, which sells "luxury for pets", offers a pink spaghetti-strap dress for pooches for HK$35.99, and a fleece bed for HK$169.
And the rest
There are many miscellaneous expenses for car ownership and we don't have space to list them all. But to give you a sense of the barrage of sundry small-item expenses you'll be contending with, consider the following:
- If you need driving lessons, you can attend one of the four government designated driving schools. The Hong Kong School of Motoring charges HK$10,170 for 29 lessons lasting 45 minutes each, enough to get most on the road.
- A Hong Kong learner's licence costs HK$548. It is valid for a year. It costs HK$110 to replace. The actual road test is HK$510.
- New drivers are issued a one-year probationary driving licence for HK$90, after which you can apply for a full licence. A full licence costs HK$900 and is valid for a decade.
- The government requires a yearly roadworthiness test for all cars seven years or older. The test costs HK$530 and you may be asked to make improvements to your vehicle to pass the test.