Housing Crisis in Hong Kong

sidvaldez1234@gmail.com

According to statistics, Hong Kong comes second in the list of the largest number of billionaires in the world and has the highest density of ultra-high net worth individuals (> $30 Million). Given how one in every seven people in Hong Kong is a millionaire, Hong Kong has earned quite the glamorous reputation among foreigners.

Despite all of the wealth Hong Kong possesses, many residents still struggle with one of the basic human needs - Housing! This situation arose during the financial crisis in 1998. Due to falling stock prices, traders in Hong Kong resorted to short-selling, which led to the interest rates in the economy to shoot up by nearly 300%. As a result of this crisis, the Hong Kong Government bought a large number of stocks in various private companies, and consequently restricted the construction of public housing.

The present situation in Hong Kong is alarming, given that the authorities receive applications for flats and public housing exceeding hundred times the supply of such houses. One of the major reasons behind such a shocking shortage of a basic right is due to the government's mishandling of land area. Only 7% of the city's land is allowed to be developed for real estate purposes. Moreover, this land is sold at sky-high prices to rich developers who, to maintain their profit margin charge even higher prices and rent for the houses they develop. The price of real estate in Hong Kong is so high that foreign investors often see housing as a worthwhile investment opportunity!

To explain this problem in simpler terms, let's talk about demand and supply. Since the supply of land is less (and therefore unable to meet the demand for land), it is sold by the government at higher prices. The developers who buy this land hoping to earn a profit, charge an even higher price for the developed houses, keeping in mind the high price they themselves paid for the land. The consequences of this seemingly simple demand-supply problem are faced the hardest by the lower income groups. The word “suffering” is putting it lightly to what the bottom half of the population goes through; Presently tens of thousands of people in Hong Kong don't have access to proper housing facilities and are forced to sleep in subways, under bridges or in partially open fast-food joints.

More than 2,00,00 people presently reside in subdivided apartments meant for a single small family. This is done to accommodate the maximum amount of people in minimal space. if this situation wasn’t already scary, these living spaces are often called "coffin cubicles'' due to their very small sizes (often less than that of a car parking area). When thinking of Hong Kong and their luxurious reputation, most people do not expect a situation wherein people are residing in coffins. The size of such living spaces is generally less than 20 square feet. These are separated from other "coffins" by the use of wire meshes. A person can barely stretch fully inside these spaces and has to share restrooms and kitchen amenities with a large number of other families. Such conditions end up having a deep physical and mental impact on the residents of these “coffins”, especially on the elderly population, who may end up having to live separately from their families due to lack of space.

What is most alarming about this situation is, the rent charged for these "coffins" isn't actually very low! Rent varies from $180 to $250. To put things in perspective, In India, for $250, you can easily afford a one-bedroom apartment and if you stretch your luck two-bedroom flats are also available. An average apartment costs a whopping $1.28 million to buy in Hong Kong. This surely should give you an idea of how bad the condition of housing is in Hong Kong. The housing crisis also highlights the degree of inequality prevalent in the nation.

An easy solution to this crisis could be merely increasing the percentage of land available for development, however, doing so would lead to the rise of another crisis. Studies have stated that using land for construction leads to faster deforestation and causes very high emissions due to burning of fossil fuels. Hence, it is evident that Hong Kong cannot trade-off a housing crisis for an environmental one.

The Government plans to add 280,000 public homes and 180,000 private homes to the current quantity of housing by 2027. The people are also in dire need of some immediate relief, however, an issue as fundamental to basic living as housing cannot be resolved this easily, given the size of the crisis. To combat the crisis, companies in Hong Kong have donated their land to the government for development and some have also collaborated with the government to subsidize public housing in rural areas. There is no easy solution to this issue, given that many complex factors are at play, such as the suitability of the available land for development. Despite that, it is high time that the people of Hong Kong get to live like humans in the "rich and wealthy" nation.

Sources

1-https://news.cgtn.com/news/2019-08-14/How-Hong-Kong-survived-the-1998-financial-crisis-J9lwvZrsNq/index.html

2-https://www.scmp.com/news/hong-kong/economy/article/2125641/does-hong-kong-have-housing-crisis-answer-depends-whether-you

3-https://www.huffingtonpost.in/entry/hong-kong-most-expensive-city-housing_n_5beeb701e4b0860184a79215?ri18n=true

Cover image credits: Vincent YU-AP