Desk research exercise on housing affordability in HK

 

Desk research exercise on housing affordability in HK

 

Article 1

Hong Kong tops global list of most expensive housing market again as protests make little dent

(url address: https://www.scmp.com/business/article/3046868/hong-kong-tops-global-list-most-expensive-housing-market-again-protests)

Hong Kong has been ranked yet again as the world’s least affordable housing market with social unrest failing to make any meaningful dent on home prices for most of 2019. That dubious honour is for the 10th straight year and is unlikely to be toppled in near future.

A family in the city would need to save up for 20.8 years to afford a home in the city, according to the annual Demographia International Housing Affordability Study, which ranks 92 major markets across the world based on median affordability scores. That has barely changed from 20.9 years in 2018.

 

Article 2

HK is ‘least affordable housing market’ for 10th year running

(url address: https://www.chinadailyhk.com/article/119131)

Hong Kong has been ranked as the world’s least affordable housing market for 2019 – for the 10th consecutive year – according to a survey released on Monday.

The special administrative region has a median multiple – the median house price divided by the median household income – of 20.8, a modest improvement from the previous year’s 20.9, a report by urban planning policy consultancy Demographia International Housing Affordability said.

The median multiple is a house price-to-income ratio that’s widely used for evaluating housing markets. It means a family on average needs to save up for 20.8 years without spending a single dollar to get enough money to buy a home in Hong Kong. 

As of the third quarter of last year, the SAR’s median apartment price stood at HK$7.04 million, while the annual median household income was HK$338,000. 

…..  The sky-high home prices are linked to an acute shortage of land, the report said, adding that new residential development has been strongly controlled by the Hong Kong government since the 1970s.

The Task Force on Land Supply, which was set up in September 2017, proposed designation or reclamation of significant new areas for housing development in late 2018 in a bid to improve housing supply and affordability.

Meanwhile, several private housing developers have contributed portions of their land holdings to alleviate the housing shortage. Wheelock Properties, controlled by locally listed Wheelock and Company, said last month it will lease several plots of land in Tai Po, Tuen Mun and Tung Chung to the government for a nominal fee of HK$1 each for a period of eight years.

Hong Kong has a large public housing program to ease housing woes. However, there’s still a shortage of public housing. The Hong Kong Housing Authority says the average waiting time for public housing for applicants was about 5.4 years in September last year.

 

Article 3

Hong Kong Homes Remain World’s Least Affordable for 10th Year

(url address: https://www.bloomberg.com/news/articles/2020-01-20/hong-kong-homes-remain-world-s-least-affordable-for-10th-year)

The city topped Vancouver and Sydney as the most unaffordable housing market in 2019, according to a report Monday by urban planning policy consultancy Demographia. Hong Kong’s median property price declined slightly to 20.8 times median household income last year, compared to 20.9 times the year before….

Hong Kong’s sky-high property prices have long been a source of contention in the city, where about one-in-five residents live below the poverty line. Some have resorted to living illegally in steel boxes or industrial estates because they can’t afford a home.

 

Article 4

Why is the Hong Kong Housing Market Unaffordable? Some Stylized Facts and Estimations. March 2020.

(url address: https://www.dallasfed.org/~/media/documents/institute/wpapers/2020/0380.pdf)

As an international financial center, Hong Kong is mentioned in global media from time to time. With a fixed boundary and a fixed exchange rate with the United States, Hong Kong has been able to attract much non-local investment in its real estate sector….

 

… the house price increases faster than the wage, as the house price-to-wage ratio increases from 100 (1982 level) to about 270 (2018 level)…..

… a significant number of households live in need-based public rental housing, and hence they are somehow "protected" from the appreciation of the house price…

… Since the rent in public housing is significantly below the market and adjusts slower than the market, it appears to be safe to conclude that up to a third of the population is shielded from the housing market fluctuations, and they tend to be the lower-income households. Since public housing shelter in such a scale is absent in most countries, it may suggest that merely comparing the Hong Kong house price-to-income ratio, or similar metrics, with other countries, may not be as informative as previously thought.

 

Article 5

Solving Hong Kong’s housing affordability problem. 1 May 2020.

 

The chronic shortage of affordable housing in Hong Kong pushed it to become the first city in Asia to develop public housing. The Hong Kong Housing Authority is now the biggest social housing provider in the world with a rental stock of over 832,000 units that accommodated 29 per cent of the city’s population in 2018. Hong Kong’s public housing caters for not just the poorest but also middle-income households. While the poorest 40 per cent of households can apply for highly subsidised rental housing, middle-income households are supported with government developed flats that are sold at a discount of 60–70 per cent via a shared ownership arrangement to increase home ownership.

But the waiting list for pubic rental housing is long. Over 250,000 households and family applicants must wait on average 5.4 years for a rental flat. The home ownership scheme keeps no waiting list but a round of sales in 2018 attracted nearly 60 applications per flat.

Yet not all applicants to public rental housing are equal. Non-elderly single applicants, who are subject to a point and quota system, are disadvantaged. Points are assigned according to an individual’s age and years spent on the waiting list. This makes it nearly impossible for young single applicants to enter the public rental sector.

Land reclamation has been the main instrument used to meet the increasing housing demand, and expanding the subsidised social housing sector has been employed to increase housing affordability for the poor. But both polices seem to have reached their limits.

Reduced housing supply and stringent policies on non-elderly single applicants of public rental housing have worsened homelessness …

 

Article 6

Affordable housing is still achievable in Hong Kong

10/15/2019 - 09:50

 

We are seeing a bizarre phenomenon in society where the “have-nots” worked extremely hard to try to catch up with property prices and save for the down payment while the “haves” seem to live in parallel time and space seeing their assets appreciate through property prices. A completely broken housing ladder has denied the grassroots in society any sense of hope or motivation that they can achieve financial and social status. Instead, it is giving them a sense of powerlessness and resentment. The housing problem in Hong Kong is, therefore, what we only see on the surface. What is under the skin is a widening wealth gap between the haves and have-nots, which in turn propels a loss of social mobility and a sense of social injustice among the have-nots.