Wealth Blog

Property and class

PUBLISHED : Thursday, 24 January, 2013, 8:47am
UPDATED : Thursday, 24 January, 2013, 8:47am

Could the relentless rise in real estate prices push the middle class to extinction as only the really wealthy can afford property? That’s one of the many questions facing Hong Kong and one posed by the recent New York Times piece on property and class in the city. 

“A lot of people are hanging on by the skin of their teeth,” said Cheryl King, an acting coach who lives and works in a combined apartment and performance space, the article says. She sub-lets it out to help offset the rent. New York property prices wildly outstrip the rest of America.  Her niece just bought a house in Atlanta for US$85,000, almost what she spends on rent and utilities in a year. To her niece in Georgia, making US$250,000 a year is riches. “To us, it’s maybe the upper edge of middle class,” says the frustrated New Yorker. It seems sky high prices for just about everything threaten to chase away all but New York’s super- rich. The price tag for basic items — from milk to haircuts and electricity, and especially housing — is more than twice the US national average, the article says.

Housing Key to Wealth

“It’s overwhelmingly housing — that’s the big distortion relative to other places,” said Frank Braconi, the chief economist in the New York City comptroller’s office. He could be talking about Hong Kong.

“Virtually everything costs more, but not to the degree that housing does,” he adds. Sounds familiar. As do the figures.  The average Manhattan apartment, reportedly US$3,973 a month, almost $2,800 more than the average rental nationwide. Manhattan flats last year sold for on average $1.46 million last year, while the US average was nearly $230,000. And the rich-poor divide in Manhattan is spectacular — the wealthiest fifth of Manhattan’s residents make 40 times more than the lowest fifth, according to 2010 census data. Ask people around the country, the piece says, and they all claim to be middle class. Americans don’t like to own up to being rich or poor.  A US$70,000 annual income is middle class for a family of four, according to the median response in a recent Pew Research Center survey, and yet people at a wide range of incomes, including those making less than $30,000 and more than $100,000 a year, said they, too, are middle-class, the New York Times said.

What parallels can we draw from Hong Kong? Perhaps not much, since the societies are essentially so different. Here the class divide is much more stark - home owners and those who will never be.