High Housing Prices in Hong Kong

Hong Kong, one of the most populous metropolises in Asia even in the world, has witnessed its boom of property market and also the ever-increasing housing prices. According to Hong Kong’s Census and Statistics Department, till the end of 2012 there are 7173.9 thousands people in Hong Kong (‘Hong Kong-The Facts,’ 2012), sharing the valuable four present of the livable land out of its 1,104.32 km² total land area (‘Land Utilization in Hong Kong,’ 2012). Although averagely each resident in Hong Kong only own about 12m² of residential area, the housing prices in Hong Kong has still increased to an high position. The average residential property prices which have grown to 226,200/sq. Ft., same as 12 times the median salary of the typical buyers, is already among the world’s highest (‘Mid-levels They Ain’t,’ 2012).

The theory that once the supply decreases and the demand increases, prices always go up (Smith, 1776) can be adapted to the property market in Hong Kong, giving the reason for the extremely high housing prices. With limited land and rough landscape, Hong Kong faces the shortage on livable land. Meanwhile, the Government’s strict land policy, which leads to low supply, exacerbates the shortage situations, as the percentage of land in use is less than 25% in which only approximately 76km² were developed for residential purpose (Poon, 2011). Moreover, land-hoarding behaviors contribute to the high demand for land. Since 2008, the World Financial Crisis tense the world and left recession in the stock market. The investors and local privileges bought properties for securing their capitals. The more robust demand has dramatically contributed to the doubling of Housing prices since 2008 as reflected on figure 1.1.

High housing prices in Hong Kong have raise considerable social problems. Due to the high pressure from high housing prices, social unrest is looming. As most of people’s incomes just satisfy the expense on housing, there is less money remained for health care, education, food and transportation. The hardship leads to the rise in mental pressure which can finally increase the crime rate of the society (Jackson, 2012).

With the increase of housing price, wealth gap widens in Hong Kong. According to Gini coefficient (Lo, 2012), 16% Hong Kong people live in poverty while the wealth gap is among the highest in the world. Wealthy people have the ability to purchase houses and will become richer as housing price increases while the unprivileged have to work harder to afford daily expenses the price of which is rising due to inflation caused by high housing prices. The wealth gap is unavoidably and continuously broadened.

Another effect caused by high housing prices is the delay of marriage of young generations. A research of Census and Statistics Department indicates that the average age at first marriage for both men and woman increased by four years from 1981 to 2006 (‘Marriage and Divorce Trends in Hong Kong, 1981 to 2006,’ 2007). Nowadays, the young generation is independent and will not settle down until they can afford their own houses. Young adults usually need to struggle for years to afford a house, resulting in delay of marriage.

Hong Kong’s high housing prices are a serious problem. Shortage of land, the government’s policy and land-hoarding altogether lead to the continuous increasing of housing prices. It has already caused considerable social issues and affects the stability of society, balance of poverty and also residents’ daily life.

  

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