High rent, low salaries: how young Hongkongers are scheming to secure subsidised housing

PUBLISHED : Thursday, 06 November, 2014, 6:22pm
UPDATED : Friday, 07 November, 2014, 4:36pm

Wong Yik-mo can't wait to move out of his parents' home in Jordan, and it's easy to understand why. He and his wife are among five adults - along with his parents and older brother - sharing a 500 sq ft flat.

The little personal space means quality sleep is hard to come by.

"My dad has poor hearing. He always watches television late into the night with the volume turned up, which makes it difficult to sleep."

The 35-year-old became so desperate that, in February, he quit his job as a warehouse worker to qualify for public housing.

As incredible as it seems, Wong's drastic action makes sense in light of the dire housing opportunities for young people in Hong Kong.

Wong must apply for public housing as a single person because his mainlander wife is considered a non-resident. The HK$14,000 he earned at the warehouse exceeded the HK$9,670 salary cap for single candidates, which led to his application being rejected this year. That was when he decided he had to give up his job and put in a fresh application.

"I'm now doing odd jobs that pay day rates, mainly on construction sites or as a delivery worker. The pay is so low that I can't contribute household expenses to my parents. However, because it's much more difficult to get a flat than find a job in Hong Kong, quitting is the sensible thing to do," he says.

Stories such as Wong's are increasingly common amid the acute shortage of low-cost and subsidised housing as the cost of renting or buying private property continues to escalate.

About 28,000 new public housing flats were completed annually between 1997 and 2002, but numbers plummeted when the Sars outbreak pushed the city into recession. The supply of public rental flats has only edged up slightly in recent years, rising from 11,186 new units built in 2011 to 14,057 units in 2013.

What's more, construction of Home Ownership Scheme (HOS) units, which used to supply 18,000 subsidised mid-range flats for purchase each year, was halted in 2003. In the difficult economic climate, the government responded to developers' bitter complaints about the listless housing market by imposing an indefinite moratorium. That was lifted in 2011, but the first of the new HOS flats isn't expected to be ready until 2016.

The shortage of subsidised housing has hit young singles the hardest. The number of single applicants under 30 years old has risen more than fourfold from 13,000 in 2007 to more than 60,000 this year, about half of whom have post-secondary education.

There were 255,800 applicants awaiting public housing at the end of June. Of these, 130,000 were single people under 60 years old - quadruple the equivalent 2005 figure of 30,000 applicants.

Why are people willing to make such a big sacrifice for a home? It's a question that society should consider
Wong Kwan, chairman of the Federation of Public Housing Estates Resident and Shopowner Organisations

As a result, working-class residents go to extraordinary lengths to try to secure public housing. Besides giving up a stable job, tips making the rounds on internet forums include faking family conflicts or mental illnesses to get a flat on compassionate grounds. Because means tests are administered between six months and two years before people are considered for allocation, another common tactic is switch to lower-paying jobs when the assessment is imminent.

A 45-year-old security guard surnamed Lo has done just that. The divorcee makes more than HK$10,000 a month in her job in a Yuen Long development, but has recently asked her supervisor to schedule fewer days of work so that her salary would not exceed the limit for a single applicant.

"I check my number on the queue all the time. I know it's my turn soon to get checked," she says.

When she applied for a flat, Lo worked 12 hours every day but earned just HK$7,000. But the introduction of a minimum wage in 2011 pushed her above the eligible income bracket.

"I don't know what single person would be eligible for public housing; even a lowly security guard earns HK$10,000 now. I was forced to adopt the salary ruse," she says.

Once she secures a public rental flat, Lo can return to normal work as tenants are means tested a decade after they move in. From their 11th year, they must report their salaries to the Housing Authority every two years; those who exceed salary limits are required to pay higher rents but it is still far below private rentals.

The various ploys being adopted by residents reflect their desperation, says Wong Kwan, chairman of the Federation of Public Housing Estates Resident and Shopowner Organisations.

"People are unable to fulfil their housing needs in the private market, so they would rather seek a salary freeze or deduction, or even quit their jobs to be eligible [for public housing]. Why are people willing to make such a big sacrifice for a home? It's a question that society should consider."

Applications for public housing are separated into three queues: families (three years' wait), elderly singles (two years) and single people under the age of 60.

Under the Housing Authority's scoring system, younger singles need 170 points to secure a flat. Applicants need to be at least 18 years old, and points are awarded based on age (three points for every year above 18) and length of wait. So an 18-year-old would start with no points, a 20-year-old would have six points on application. And for every month's wait, they are given an extra point.

That's why many young people now try to beat the system by taking a similar path to Martin Lam Chun-yin's. A sound technician, he applied as soon as he turned 18. He was earning HK$8,000 at the time, putting him within the income bracket for public housing. Now 26, he should have about 96 points, but since he still lives with his family in a public housing flat, 30 points are deducted from the total.

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The number of flats allocated to younger singles each year is capped at about 2,200 flats (10 per cent of the total), which means chances are slim. A recent overhaul of the scoring system further stacks the odds against young people. Under the changes that come into effect in February, applicants are awarded nine points instead of three for each year that they are above 18. People aged 45 or above receive an extra 60 points.

Lam views these measures as discrimination against young single people:

"Under the new system, single people won't be allocated a flat until they are at least 45 years old … Especially for a man, living with the family reflects badly on his image," he says. "But if I were renting, I wouldn't be able to contribute to my family."

Census figures show that the ratio of Hongkongers under 25 who are still living with their parents has increased from 93.9 per cent in 2006 to 95 per cent in 2011. For those aged between 25 and 34, the ratio rose from 43.9 per cent to 47.7 per cent.

This is understandable. Despite rising inflation and skyrocketing property prices, young people's salaries have stagnated: the median income of people aged from 15 to 24 remained at HK$8,000 for the decade from 2001 and 2011. Median income for people aged 25 to 34 rose by just HK$250 in the same period - to HK$12,500.

Under this system, it's almost impossible for single people under the age of 35 to be allotted a public housing flat, Wong Kwan says.

The figures support Wong's contention. Of 12,138 public rental flats available between 2006 and 2012, just 156 went to people aged from 30 to 39; no flats were allocated to anyone under the age of 30.

Some might get a flat on compassionate grounds such as fights in the family, and others accept flats originally designed for the elderly. There are about 40,000 such flats in blocks spread across Tuen Mun, Wong Tai Sin and Kwun Tong, which are unpopular with the elderly because toilets and kitchens are shared.

But because these blocks are quite new, it's not sensible to tear them down. So the Housing Authority allows young people who are willing to accept those flats to jump the queue, Wong says. "It's not that young people don't mind sharing facilities, it's just that there's no way they can get a flat otherwise."

The government should increase the supply of subsidised housing to alleviate this situation, Wong says.

They could also give incentives such as mortgage schemes to encourage tenants to buy HOS flats, freeing up more public rental flats for the poor who are in greatest need of cheap accommodation.

"Before 1997, it was possible for young graduates to buy a flat after working for about 10 years. Now it's just impossible; housing prices are rising at a rate far exceeding that of salary increases. For many young people, the ultimate aim is not to secure a public housing flat but to gain eligibility as a tenant to buy an HOS flat at a deep discount. And with an HOS flat, they are no longer subject to means testing and can take on any job they like."

Wong argues that giving incentives for home purchase would still bring public savings.

"That's because the government's annual subsidy for public housing is a lot more than that for HOS flats. When HOS flats are resold in the private market, owners must pay a land premium to the government. But a family in public housing could live there for the rest of their lives and transfer the flat to their children, who also live there permanently. The subsidy to these families is a lot greater."