Housing prices in Hong Kong have increased by 140 percent since 1997 and 582 percent since their lowest point after the handover in 2003. This growth has meant that much of the demand, which is still observed today, is unmet in the Local market. Looking at the numbers, an average family would need to save for 23.2 years without spending a single dollar to own a home in the city. The data was released by the 2022 Demographia International Housing Affordability Study, which calculated affordability based on median house prices and household incomes. Once again, Hong Kong has remained the least affordable housing market – a place it has held for 12 years.
Like the four leaders who came before him, Chief Executive-elect John Lee identified housing as “the top priority among priorities”. His proposal includes the creation of new working groups to oversee the provision of public housing and land to be managed by ministers. However, the task is not easy and in statements to the South China Morning Post, some young people in Hong Kong say they are not willing to wait. One of them is Stanley Lee, 28, who is looking for cheaper options with more space in other cities on the Greater Bay. The young man explains that “it is more realistic to buy a 100 square meter house in Dongguan than in Hong Kong”. A 100 square meter house in Dongguan, north of Shenzhen, sells for between two to three million yuan, or HKD 294,000 to 442,000. In Hong Kong, the equivalent would cost US$2.85 million, even in the relatively more affordable New Territories, according to data from the Hong Kong Government’s Classification and Assessment Department. “The most recent private houses are too expensive for us”, he says, adding to the newspaper that he hopes that the new Executive will “increase the supply of public housing and improve the Home Acquisition Plan for young people” like him.
Another young man interviewed by the South China Morning Post, founder of a start-up company that develops smart transportation solutions in the Hong Kong Science Park, says he plans to expand the Qianhai company in Shenzhen: “In the long term, having accommodation there will probably be my plan”.
Land Power was among the first real estate agencies to market homes across borders to Hong Kong residents in the early 1990s. At that time, retirees or customers in their 40s and 50s were the main buyers. The company’s former chairman, Michael Choi, says that it is now more difficult for young people to have a home in Hong Kong. “It seems easier on the Mainland”, he reiterates to the newspaper, explaining that however the environment and quality of life in the Greater Bay “are not very different from Hong Kong”. Choi believes that mainland cities will be more appealing to young people, even Hong Kong graduates, as opposed to 20 years ago.
The Greater Bay Area encompasses Hong Kong, Macau and nine Chinese cities in the Pearl River Delta, namely Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing. One of the main goals is to create infrastructures capable of shortening travel between cities, with the mission of creating a one-hour travel circle between each one of them, motivating an exodus that until recently was not considered.
“Despite the efforts of several chief executives, home prices in Hong Kong still do not see significant signs of slowing down given the shortage of land supply, reductions in the target of private housing units and second-hand supplies,” said Lau Chun- kong, managing director of Colliers Hong Kong.
At the time of the transfer of sovereignty, a record level of house prices was reached. The public housing price index reached 172 percent in June 1997, having shot up to 900 from 17.2 in 1984.
However, just three months after the inauguration of Hong Kong’s first Chief Executive, Tung Chee-hwa, the index plunged, falling 65 percent by July 2003 – a consequence of the Asian financial crisis, the outbreak of acute respiratory syndrome grave and Tung’s massive proposal to supply housing, dubbed the “85,000 policy”.
Prices then began to rise, mostly steadily, after the introduction in 2003 of the Individual Visit Scheme, which gave rise to an influx of buyers from the mainland.
The index’s annual average continued to rise during the 2008 financial crisis and even with COVID-19 it only slowed by 0.5 percent between 2019 and 2020.
“When the land reserve is large, the government is then in a position to use supply as a tool to regulate the market more effectively,” Nelson Wong, JLL’s head of investigation in Greater China, told the Mornin Post.