Despite long commutes to save money, Hong Kong couple just can’t keep pace with rising property prices
Justin Yu and his wife want to have a baby but permanent home in private market seems an impossible dream
Justin Yu Wing-chung and his wife have been planning to have a baby, but there is a problem.
Yu, a 30-year-old surveyor, and his wife, a 26-year-old teacher, earn a combined monthly salary of HK$65,000 – an income to be envied by many of their peers, and they are not blowing their hard-earned money on luxuries.
But still, a permanent home in the private market seems so very far from the couple amid the ever-increasing property prices, no matter how diligently they’ve been trying to save.
“The problem has been troubling us,” Yu said. “How can we have a baby if we ourselves haven’t even settled down?”
The couple work in Tsim Sha Tsui and Jordan but are renting a 460 sq ft flat near Tuen Mun Ferry Pier for HK$10,000 a month, which means they spend two hours a day travelling between home and work by bus.
Yu said the reason why they lived so far away was that the rent was cheaper and they could save more money for eventually buying a home.
“But we feel like our savings can never catch up with the property price increase,” Yu said. “Our income exceeds the [Home Ownership Scheme] income limit, so we cannot buy a subsidised flat either.”
Chief Executive Carrie Lam Cheng Yuet-ngor introduced a Starter Home scheme in her policy address on Wednesday, which aims at helping families like Yu’s to get on the property ladder by providing them with affordable homes.
Under the scheme, buyers will be eligible if they have lived in Hong Kong for at least seven years and never owned property. Their monthly income will range from HK$26,000 to HK$34,000 for single people and from HK$52,000 to HK$68,000 for households of at least two.
The home prices under the scheme were unknown, but a government source said monthly mortgage payments, as measured against monthly income, would be in line with that for other subsidised housing, which is 40 to 50 per cent.
If the mortgage-to-income ratio was 50 per cent, Yu and his wife would have had to shell out HK$32,500 paying back loans for a flat. Assuming they could borrow 95 per cent of the flat’s value from the bank, with an interest rate of 2.15 per cent and a repayment period of 25 years, the flat would sell for almost HK$8 million.
“This will be no different to buying a private flat,” Yu said. “To me, I think a ratio of 20 to 30 per cent is reasonable.”
But he said the scheme could at least ensure that they would not be kicked out by private landlords.
Yu said he and his wife first rented a flat in Tuen Mun town centre, but before their two-year contract even ended, their landlord, who bought the flat for about HK$900,000 in 2011, required them to move out after selling the unit for around HK$3.6 million last year.
“Many of our friends have encountered similar situations as well,” he said. “One of them moved from Wan Chai to Tsing Yi after the landlord raised the rent for 30 per cent. We have to keep moving. It really troubles us.”