HONG KONG: “It is awfully stressful,” says Martin Wu, a 21-year-old University of Hong Kong student and frustrated prospective home buyer. “You start to think about when the day will come when you can afford your own home and what you will need to do to achieve it. I do not want to say it is unachievable, but when I think about how much I will have to save over the years, I cannot comfortably tell myself that it will happen. It is just the uncertainty.” Wu, who is doing a master’s degree in urban planning, lives with his family in Pok Fu Lam. Years ago, his parents were able to buy their home as the local housing market was less intense, but now Wu, like many other young Hongkongers, faces the prospect of never becoming a homeowner. He says the city needs more subsidised Home Ownership Scheme (HOS) properties – just 2,657 were put up for pre-sale in February 2016, with the cheapest priced at HK$1.49 million. The scheme was set up in the early 1990s to provide flats for sale at subsidised prices to low- and middle-income families who would not otherwise be able to afford to buy.
Despite enjoying drama classes in school, Wu chose to pursue a career in urban studies because he felt it would be more financially stable. He feels guilty about any purchases he makes because he thinks the money should have gone towards his savings. “I grew up here, so if I had a chance I would stay here,” Wu says. “The pace of life is exciting and my family is here. I studied in the UK for one year; I would not have come back to Hong Kong if I did not plan on working here in the longer term. “I would like to have the option of buying [a home]. I think people in Hong Kong are living less as a result of this housing situation.” Like Wu, many prospective buyers in Hong Kong, particularly young people, are struggling to get onto the housing ladder in the world’s most expensive property market. Additionally, the buying process with estate agents has become increasingly frustrating, buyers report. The Estate Agents Authority (EAA) reported a year-on-year increase of 72 per cent in complaints last year in relation to first-hand residential properties. Major gripes included failures to honour the process of a rebate; issuing non-compliant advertisements; offering loans to clients; and providing misleading mortgage information. Grievances with estate agents appear directly tied to the sky-high prices. EAA chairman William Leung Wing-cheung revealed last month that the number of complaints relating to overseas properties had also sky-rocketed because “the local residential market is stagnant”.
Hong Kong was ranked the world’s priciest home market for the seventh consecutive year in the Demographia International Housing Affordability Survey’s study of 406 cities around the world. The study found the city’s apartments cost 18.1 times gross annual median income in the third quarter of 2016. Home prices reached a record high in November last year, after climbing for eight consecutive months. During the same month, Chief Executive Leung Chun-ying imposed a 15 per cent stamp duty on non first-time buyers in an attempt to cool the market, but prices have continued to soar. In 2015 the Hong Kong Monetary Authority announced that properties priced at HK$7 million or less required a 40 per cent down payment, up from 30 per cent – another attempt to cool the market. But the tactic is hitting young first-time buyers the hardest, a consequence which Monetary Authority chief executive Norman Chan Tak-lam admitted was inevitable. Lawmaker James To Kun-sun said the city’s consistently high property prices were making homes unaffordable for average people, while cranking up the heat on estate agents to sell. He said the number of property transactions had been relatively low, putting pressure on agents. “They have their very heavy burden – pressure from the company, family expenditure, from their wives or husband, or kids,” he said. “That’s a lot of pressure on all those tens of thousands of agents to offer to surrender to Satan.” The volume of overall property transactions has declined since 2010, according to figures from Hong Kong-based real estate agency Midland Realty. Last year there were 73,004 transactions, a drop of 4.14 per cent from the year before, and a decrease of 55.14 per cent since 2010.
