Hong Kong’s housing woes a result of deal with the devil
Flats are not only getting more expensive, but also smaller; and as the government pushes to build ever more units, quality of life will suffer
An Australian friend of mine who has been in Hong Kong for decades often regrets that he never took the plunge and bought a flat. Otherwise, he would be sitting pretty now. But what stopped him all these years?
“Every time I looked, the same price here would have got me a much bigger house with front and backyards back home,” he said.
Perfectly understandable, but that’s not how real estate works here. In overseas developed economies, at least with cities that have not had a crazy property bubble in the past decade, you are usually rewarded with bigger and better houses as you progress up the economic and career ladder.
Your quality of life, at least at home, improves over time, assuming nothing bad happens to your career.
Not so in Hong Kong; most of us are living in flats not much bigger than the ones we grew up in, even if we have reasonably good jobs. That’s because long ago, the city made a bargain with the devil.
We have always tried to pack as many flats as possible into our space-starved city; let quality of life be damned. Especially now, the government’s very legitimacy rests on improving home affordability and providing more flats.
But things will only get worse, assuming the government succeeds in meeting its targets over the next decades.
Officials project building 470,000 public and private units between now and the second half of the next decade.
In a sign of things to come, just look at the proposed development density at two new public housing estates in Fanling North and Kwu Tung North. They are expected to offer a total of 48,400 flats between 2023 and 2031, a proposed increase of 34 per cent, but only by tweaking the development density of the areas. We can expect more such density adjustments at the expense of public amenities and neighbourhood quality in the coming years.
A flat of just 395 sq ft in gross floor area in City One, in Sha Tin, an old private estate, has just sold for HK$5.85 million. Thanks to our Faustian bargain, anyone who owns a flat is likely to be a multimillionaire. If economics is all about trade-offs, you are rewarded with capital gain on your property in Hong Kong, not improved quality of home life.
But hey, at least you are rich, on paper.