Hong Kong home prices have dropped about 30 per cent from the 2021 peak on the back of a sharp increase in interest rates that has made mortgage payments more expensive and housing less affordable. With home prices expected to fall further, the question is: should the government stop or slow down its land sales?
The answer is no: to ensure Hong Kong remains a world-class city where people can live comfortably, it should increase its property supply.
Hong Kong’s housing remains among the world’s least affordable in terms of the property price-to-income ratio, despite this number dropping from 40 in 2021 to 29 now by our calculations – meaning it takes 29 years of the median income to buy a home on average. This is still far higher than for major cities such as New York (14), Tokyo (16), London (19) and Singapore (23) – though largely in line with other Chinese cities such as Beijing, Shanghai and Shenzhen (around 30).
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Hong Kong’s property price-to-income ratio has worsened over the past 70 years. The number has gone from 4-6 in the 1950-1970s and 8-12 in the 1980-1990s to more than 20 since 1997. Many Hongkongers are nostalgic for the days when ordinary folk like teachers could afford to buy private flats.
Hongkongers also have less living space than people in many comparable cities. The average in Hong Kong is about 172 sq ft, compared to Singapore’s 355 sq ft, London’s 350 sq ft, Shenzhen’s 300 sq ft just across border, Beijing’s 360 sq ft, Shanghai’s 330 sq ft and New York’s 530 sq ft – it’s even smaller than the 216 sq ft average in Tokyo, known as one of the world’s most crowded cities. Indeed, an estimated 220,000 people in Hong Kong still live in subdivided flats (including cage homes) with just 40-80 sq ft per person, or even less.
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The average living space in Hong Kong has barely improved from 165 sq ft since the handover in 1997. This is in contrast to the steady improvement before that: from the tiny 24 sq ft in the 1950s, to 35 sq ft in the 1960s, 40 sq ft in the 1970s, 50 sq ft in the 1980s and over 150 sq ft in the early 1990s.
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The grim reality of life in Hong Kong’s ‘coffin homes’ | Talking Post with Yonden Lhatoo
The grim reality of life in Hong Kong’s ‘coffin homes’ | Talking Post with Yonden Lhatoo
