Letters | Hong Kong housing prices must fall further for homes to be affordable

Readers discuss a truer measure of affordability amid the latest price correction, Hong Kong children’s lack of exercise, and the death of Henry Kissinger

Hong Kong housing

Letters

Published: 11:30am, 5 Dec 2023

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Despite being one of the cities with the lowest home ownership rates in the world, Hong Kong is obsessed with properties. To many, owning their own home is their goal in life, and to the rest, owning more than one home for investment is long seen as a source of stable income.

Therefore, the current house price correction represents pain and sorrow for some, but to many others, this seems a great opportunity to get on the ladder.

Although the government has rolled back some of its measures to contain house prices that were introduced more than 10 years ago, house prices have yet to find their footing. Factors such as higher interest rates and nearly stagnant real wages growth are affecting house-hunters’ appetite for a piece of Hong Kong they can call home.

Although house prices have fallen by 21 per cent from their all-time peak in August 2021, housing affordability has never been as dire in the last 14 years. A simple analysis, calculated using statistics from the census department and the Hong Kong Monetary Authority, shows that the average monthly mortgage payment for an average 45 square metre (480 sq ft) home based on the best available mortgage rate is equivalent to 132 per cent of the average monthly wage. This is a better indicator of housing affordability than the traditional house price-to-income ratio because the majority of homebuyers use mortgages.

This 132 per cent ratio is unhealthy and affects consumption. Since 2015, it has required at least two average salaries to sustain mortgage repayments for an average home.

Many are hoping that the dovish statements from Federal Reserve members indicate drastic interest rate cuts, but the now unlikely US recession will make it difficult for the US to cut rates sharply, especially since inflation is still not within the target range.

At the same time, the tight liquidity position of Hong Kong banks further reduces the chance of sharply lower interest rates.

Assuming that Hong Kong’s mortgage rates fall at the same pace as the Fed dot plot, which expects a 50 basis-point cut by the end of 2024, and that the average wage in Hong Kong grows by 4 per cent in 2024, for Hong Kong’s housing affordability to reach a mortgage repayment-to-income ratio of 100 per cent, last seen in 2016, house prices would likely need to further correct by 16.2 per cent from the level seen in the third quarter of this year.

Angus Lam, Tai Po

Heed Rudd Gullit’s advice for the sake of our children

Dutch football legend Ruud Gullit was one of my favourite players during his years with AC Milan and Chelsea.

Your article on his visit to Hong Kong as a member of the Laureus Academy, and his surprise when told that only eight per cent of Hong Kong’s young people achieved the World Health Organization recommendation of 30 minutes of physical activity every day, was telling (“Disbelief at low rate of youth exercise”, December 2).

For the past couple of years, I have been telling everyone within earshot to think about all the children who grew up in Hong Kong during the pandemic restrictions, and how they might be adapting to the world now.

Not enough is being done or being done well enough in Hong Kong to help communicate and rectify the problem of children not getting enough exercise. Maybe there’s just too many mixed messages, making it difficult for our children to absorb the right one. Perhaps as adults, we haven’t been good enough mentors.

We should heed Gullit’s words: “Playing sport makes you fitter and more concentrated, it makes you feel happy, which is what we want for kids.”

Hans Ebert, Wan Chai

US undoing Kissinger’s work to improve China ties

There is no question that Henry Kissinger was deeply knowledgeable about US-China relations and Taiwan, and that he had Beijing’s ear (“Charming, controversial Henry Kissinger steered establishment of US-China ties”, November 30).

He laid the cornerstone for the bilateral relationship. In 1971, as national security adviser to then US president Richard Nixon, Kissinger went to Beijing in secret to meet Zhou Enlai, setting up the historic meeting between Nixon and Mao Zedong a few months later. That set the framework of the relationship between the two nations for the next 40 years.

Kissinger lived long enough to see the Trump and Biden administrations destroying that hard-built relationship because they could not bear to see China’s rise. Kissinger understood China, and did not agree with the current US approach of treating China as a rival to be beaten.

Kissinger did much to strengthen US relations with China. He made more than a hundred visits to China in his lifetime, most recently earlier this year. Even at the old age of 100, he spared no effort to try to put the bilateral relationship back on track.

Compared to many so-called statesmen today, Kissinger’s achievements appear even more impressive. He has passed on, but his positive influence on the world and his efforts to build a strong US-China relationship should not be in vain.

Randy Lee, Ma On Shan