Young People Housing in a rapidly changing world – the case of Hong Kong and Insights for East Asian Countries
Ngai Ming YIP, Urban Research Group, Department of Public Policy, City University of Hong Kong, Hong Kong
House prices are beyond the reach of most ordinary people in many metropolitans around the world. As a city with the priciest housing, Hong Kong is perhaps at the extreme of housing unaffordability. A rough comparative indicator in housing price reveals that a household in Hong Kong whose income was at the median level of the city had to devote nearly a full twenty years of its income in buying a small flat of 60 square meters at the average unit price. This is far worse than all cities in the developed world. In this respect, young people are hit the most. Not only would they have to bear the burden of repayment of a huge mortgage loan, the superhigh downpayment requirement, currently at forty to fifty percent of the house value, would have excluded the overwhelming majority of young first-time buyers from the homeownership ladder. Even the small minority of high paid young professionals who are capable of overcoming the burden of regular mortgage repayment need to get financial help from their resourceful parents to pay for the downpayment.
For the majority of the young generation, homeownership becomes an unreachable aspiration. Most of them remain in the parental home, some even after they have formed their family. For others, renting is their only option if they setup their own family or choose to live independently. Yet with the stagnation of the supply of new housing, influx of students and imported professional labour from out of the city, the private rental market is also under stress. The level of private housing sector rent rises in pace with the escalation of house price. Rents of a self-contained small flats are unaffordable for most young singles who aspire independent living. Even young couples with double earnings would find such level a high burden. Hence the market reacts by creating small en suite cubicle rooms, often literally not much larger than a bed-space, in order to reduce of the cost of the accommodation. Such bed-space apartments, dubbed “split-rooms” (officially called sub-divided units SDU), proliferated in the last decade and now are homes to nearly 200,000 people. In fact, many of these split-rooms, often in dilapidated buildings in poor neighbourhoods, surpasses the rent level of luxurious apartment in nice neighbourhoods in term of unit rent. Yet nearly all such split-rooms are being converted illegally and impose high fire and hygiene risks to the renters, many of them are young people. At the same time, housing stress felt by young people is also reflected at the number of application to public housing. Hong Kong has one of the highest level of public rental housing in the world which caters for the poorest one-third of the population. In recent years, the queue for public rental housing had reached 300,000 households (which peaked in 2017). Half of these applicants are single non-elderlies and amongst these single person applicants, half of them are below the age of 25, many of them have completed or are completing higher education qualifications. This is in fact an alarming signal as most of these highly educated young people should not be eligible for public housing as the income limit for single person households is set at only two thirds of the average wage of the city. If they were able to find a job after graduation, it is very unlikely the wage level would be so low. Hence, this may be an expression of the frustration on housing and public housing is regarded as housing of the last resort. However, from a macro perspective, this so-called affordability crisis for the young generation has well been expected. As globalisation has accelerated the polarisation of both occupation and income, the young generation has been pushed to precarity in employment, career advancement and income despite they generally have a higher education achievement than their parents’ generation. Such precarious position is further exacerbated by the growing gap in wealth in which capital accumulates wealth at a much quicker pace than income. Hence those who were able to acquire asset in the form of housing at earlier years are much advantageous in the accumulation of wealth now.
Within such a backcloth, this presentation attempts to unveil the issue of housing unaffordability of young people against the global context of young people housing with particular reference to Hong Kong. Echoing a new line of thinking internationally on housing for young people, this presentation argues for a rethink of housing as commodity, its role in the family life cycle as well as state policy on housing in the era of rapid social transformation and high degree of mobility within and between cities and countries. This presentation will begin by a review of the international literature of housing for the young people and the problem of housing faced by young people in the developed world. It will be followed by a brief overview of housing situation of young people in Hong Kong. Specific issues of housing for young people in Hong Kong will be further elaboration using data collected by the author in the last few years. The presentation will conclude by a discussion of a rethink on housing aspiration, housing career trajectories in the family life cycle as well as the role of the state on housing and likely insights for countries in East Asia.