Notes on Housing Crisis in Hong Kong

Introduction

• Hong Kong is currently the most expensive city to live in globally.
• Ranked as the least affordable housing market for eight consecutive years.
• Housing prices are approximately 20 times annual income.

Current Housing Situation

• Average household income: $50,000 USD
• Average housing cost for such a household: $980,000 USD.
• Residents are living in extremely small apartments, often no larger than a parking space.

Cage Homes

• These homes accommodate one person and their belongings, stacked closely in a room to maximize space.
• Tens of thousands live in spaces ranging from 75 to 140 square feet (e.g., 120 square feet typical parking space in the US).
• Common living arrangement: subdivided houses with communal spaces for cooking, washing, and bathrooms.

Factors Driving High Prices

Land Scarcity

• Commonly cited reason for high housing prices due to dense population (7.5 million in a limited area).
• However, aerial views reveal plenty of undeveloped green space.
• Government data indicates 75% of land in Hong Kong is not developed.

Expert Opinions

• Two experts (one local citizen, one long-term resident) assert:
  • High prices are not solely due to land scarcity.
  • The real issue lies with land management and zoning policies.
• Only 3.7% of land is zoned for urban housing, not merely due to geography but due to policy decisions.

Government Ownership of Land

• The Hong Kong government owns all land, leasing it to developers for 50 years through auctions.
• Increased competition among developers drives up land prices significantly (e.g., land leased for $2.2 billion).

Tax Policies

• Low taxes are a hallmark of Hong Kong’s economy (corporate tax, no sales taxes).
• Low tax revenues necessitate high land sales prices for government income (30% of public financing income).
• Government has little incentive to release more land or lower prices.

Impact on Residents

• Current practices favor government revenue over residents' needs.
• Many residents live in "coffin homes" due to space constraints.
• Government attempts to address the housing crisis are slow due to existing incentives favoring the market.

Innovative Solutions

• Eric Wong, a local inventor, is creating small living capsules as an alternative to cage and coffin homes.
• These capsules offer more hygienic and efficient living spaces, albeit still not addressing the root issues.
• A comprehensive solution requires government policy and zoning reform to prioritize people over profit.

Conclusion

• Until systemic changes are made, residents in Hong Kong will continue to face increasingly cramped living conditions.