Hong Kong debt levels double in a decade as property boom takes its toll

Hong Kong’s households are nearly twice as much in debt as they were a decade ago, with grass-roots families earning less than what they spend every month, research by the city’s legislature has found.

A survey released by the Legislative Council research office on Monday also revealed retirees’ inability to support themselves solely with their Mandatory Provident Fund pension savings, emphasising a need to accumulate “substantial” retirement money to live without financial assistance.

In 2005, the average debt borne by each household, comprising mortgages, credit card advances and personal loans, was HK$349,100. That amount nearly doubled to HK$646,100 last year.

Overall, the outstanding balance of household loans was HK$1,594 billion, 70 per cent in the form of mortgages, more than twice the amount a decade ago.

Legco’s report acknowledged the importance of having savings to deal with emergencies such as unemployment or illness, as well as reducing society’s reliance on social welfare. “However, in face of slowing economic growth, slackening social mobility, continued inflation and escalating property cost in Hong Kong, many lower- to middle-income families may not be able to do so,” researchers noted.

Citing the latest data from the Census and Statistics Department, the report estimated that the average household expenditure in 2015 was HK$27,600 per month, representing a 46 per cent rise from a decade ago.