Housing in Hong Kong's city centre must be affordable for both rich and poor
Barry Wilson says HK must avoid policies that segregate low-income housing, often at the edge of town
Not everyone can own property and not everyone wants to. Germany, for instance, has some of the lowest property ownership levels in the developed world, with about half the population living in rental accommodation, a level comparable with Hong Kong. The difference for Germany is that it is mostly by choice as, arguably, the tenant enjoys greater rights and is afforded stronger protection from landlords.
Germans do not sit around a meal table discussing how much their home has risen in value over the past months. According to the Organisation for Economic Cooperation and Development, though house prices increased by an average of 83 per cent between 1970 and 2008 in OECD countries, in Germany they fell 17 per cent. Mortgages are also hard to come by, as a large deposit is required.
By contrast, for Chinese, it seems that owning a home is one of the most important life aspirations. For young men, there even exists the cultural pressure of needing to secure a property prior to taking a wife. A lack of affordable first homes potentially sees couples marrying later in life, becoming older parents, or perhaps not even marrying at all. More recently, with spiralling prices, purchasing property as a financial investment appears essential to younger generations.
Shortages of affordable housing in inner cities might lead to a lack of vital workers like police officers, firefighters, teachers and nurses, all unable to find accommodation near their work
It is clear that all of China's big cities are now very expensive for its citizens, especially in terms of property ownership. According to E-House China, by the end of 2014, on average, it cost a family 21.7 years' income (without additional spending) to buy a 100 square metre house in Shenzhen, right next door to Hong Kong. A quick look at the Numbeo database suggests that the price-to-income ratio in Beijing is a whopping 34.7 years, against a national average of 24.2 years in China.
Hong Kong, long considered ridiculously expensive, is not far behind at 34.3 years. To put that into context, the US continues to prop up the ladder with a national average of just 3.48 years. Rental yields in the US are some of the world's best whereas the rental market in China is still some way behind rising house prices, making buy-to-rent unattractive for homeowners and so leaving newly purchased property deliberately empty, sometimes for years.
It can be argued that income, rather than either price or availability, is the primary factor that determines housing affordability. Therefore, understanding affordable housing challenges requires understanding trends and disparities in income and wealth.
Furthermore, it seems clear that, regardless of whether for rental or purchase, housing needs to be affordable in all locations, be it in the city centre or at the edge of town. In many places nowadays, especially Hong Kong, this is not the case. This has a number of implications for society.
