Hong Kong’s housing crisis should turn city towards co-living spaces as family sizes shrink
Bernard Chan says Hong Kong must plan for the housing needs of younger people and retirees, given that household sizes are shrinking and property prices are likely to remain high
Most politicians, commentators and citizens agree on one thing: housing is Hong Kong’s most pressing problem. However, in many other big and successful cities, people say the same thing about their own communities. It is not just London, New York, Vancouver and Sydney. Housing prices have outstripped affordability in cities you might not think of, from Berlin to Dublin and Seattle.
Circumstances vary – Hong Kong has a particular problem with its near-term shortage of available land. One big cause of runaway prices, however, is the low-interest-rate environment of the past 10 years. These rates have pushed up asset prices around the world, leading to unrealistic valuations. At some point, the process will unwind. Prices will adjust and come closer into line with end users’ purchasing power.
The extreme housing affordability ratios you see in cities like Hong Kong or Vancouver will ease. This does not mean all our housing problems will be over. As long as Hong Kong and other cities have vibrant economies and offer a desirable quality of life, they will maintain demand for residential accommodation.
At the moment, we in Hong Kong are focused on finding ways to provide enough affordable living space for families. This is obviously our most pressing priority. But, looking ahead, we should also be considering demographic and lifestyle changes, such as growing numbers of people living alone or in small households. The two main groups are younger people – local or new arrivals – who are starting off in their careers, and older people who retire.
This calls for new thinking about how we use space. Hong Kong should perhaps pay attention to a trend toward co-living, in which people share residential facilities. This is hardly a new concept – university dormitories and flat sharing are examples. But there is a good case for us to plan for more co-living developments in a future where household sizes are smaller. Such accommodation can use space more efficiently as residents share various features. Even if units have their own bathrooms and kitchens, residents might have common lounges, storage areas and washing machines. Such housing could be a better use of downtown space than self-contained nano flats, and be affordable to younger people.
Similarly, these developments could provide shared facilities that would otherwise be a luxury – recreation and gym space, hobby rooms or a rooftop. Such an arrangement could suit retired people who are fit and active, or groups of people with common interests. Co-living accommodation offers the chance to be part of a community – or, for the career-minded, networking opportunities. We should not confuse co-living with temporary accommodation, such as the empty flats NGOs provide for poorer single-parent families to share. These get families out of subdivided homes, but are not a solution to basic housing problems. We are talking about rental accommodation that makes commercial sense to landlords and is affordable to particular types of tenant.
Some investors are looking at converting old hotels and housing blocks into affordable housing aimed at young professionals. Issues they face include basic design problems like ceiling heights to fit beds that can be raised. They also need to choose areas where a property with multiple small units will fit into the neighbourhood. Officials might need to amend building regulations or other procedures to encourage new designs. The Institute of Surveyors recently suggested lowering land premiums for housing aimed at the elderly, which could apply here.
Idea of cross-generational Hong Kong flats with elderly resident and younger tenant not welcomed by both sides
The point is that, even when our property market becomes less distorted, we will still face pressure for living space. Changing lifestyles probably mean more demand for a wider range of housing options than just traditional mass-market family flats. More co-living choices would give our people more flexibility and use housing space more efficiently.
Bernard Chan is convenor of Hong Kong’s Executive Council