Almost two-thirds of Hongkongers and long-term residents think the city has become a worse place since the handover, a poll for the Sunday Morning Post shows.
It also found rising dissatisfaction at slow progress towards democracy and a growing feeling that Beijing has failed to implement the principle of 'one country, two systems'.
Just 16.8 per cent of those questioned by the University of Hong Kong's public opinion programme believe the city has become a better place since the end of British colonial rule, down from 39.9 per cent in a similar survey in 2007.
The figures are based on the opinions of 883 people born in Hong Kong, or who moved to the city before the 1997 handover.
Almost four times as many people, 63.8 per cent, believe the city is worse off, 27.7 percentage points higher than in the 2007 poll.
Programme director Dr Robert Chung Ting-yiu says the figures show a 'big switch in public sentiment' and paint a gloomier picture than found five years ago.
'Probably [it was] because 2007 was the time when Donald Tsang Yam-kuen was still fresh in his position as chief executive and enjoyed good popularity, while 2012 is a time when both Donald Tsang and [his successor] Leung Chun-ying ... are both facing big trouble,' Chung said.
Tsang faced a string of scandals in his last few months in office for accepting travel and a cheap deal on a retirement flat from his tycoon friends and staying in luxury rooms overseas while on government business. He was also criticised for failing to tackle the wealth gap and high property prices. Leung's integrity was also challenged after it was revealed that he had six illegal structures at his house on The Peak.
Chung said 'the public sentiment is significantly worse than that of mid-1997, but is much better than that of mid-2003' - the year of the severe acute respiratory syndrome outbreak and massive protests against a plan to introduce controversial national security legislation under Article 23 of the Basic Law.
In the latest survey, a third of Hongkongers said 'one country, two systems' had failed, up from 13.3 per cent in 2007. Those who said it had succeeded fell by almost half, from 62 per cent to 38 per cent.
More people are now dissatisfied by the city's progress towards democratisation than are dissatisfied, the reverse of the 2007 poll.
The survey's margin of error is plus or minus 3.1 percentage points.
The percentage of people in the survey who say the wealth gap has widened in the past 15 years; 16 per cent say it has not changed