Housing situation and housing supply in Hong Kong
Over the past decade or so, problems such as a shortage of housing supply, the high cost of housing, and the fact that some families must settle in inadequate housing were all issues of concern in the community. The picture of the housing situation and housing supply emerges as follows.
According to the latest population census conducted in 2021, the median per capita living area in Hong Kong was only 16 square metres, lagging behind other Asian cities such as Singapore (33 m2 ), Seoul, South Korea (31 m2 ) and Tokyo, Japan (20 m2 ).
Although housing completions stabilized in the past five years, the various segments along the housing ladder in Hong Kong are still under varying degrees of pressure Housing completions: Thanks to the Government’s resolute efforts to create land for housing construction in the 2010s, housing completions increased significantly to a total of 173 900 units in the past five years (2017 to 2021), with the average annual completions increased by about 36% when compared to the previous decade.
However, (a) the number of public rental housing (“PRH”) units completed decreased instead of increasing correspondingly in the past five years; (b) although the number of large and medium private residential units (i.e. units with a saleable area of not less than 40 m²) completed also increased in the past five years, many of the new units were small residential units (with an area of less than 40 m² and accounting for 40.2% of the total completions in the past five years).
Low-income families: As PRH completions are not high, the waiting time for PRH has hit a record high (6.0 years in June 20222 ) and the number of applicants (in terms of the number of general applicants) is also higher than 150 000. Many families who cannot afford to be sole tenants in private residential units on a long-term basis can only rent subdivided units (“SDUs”) (with the relevant population estimated to exceed 200,000).
Private residential market: Supported by the prolonged low housing supply, persistently low interest rates and the so-called “inelastic demand”, prices of private residential units have surged, rendering home ownership unaffordable for the public in general. The index of home purchase affordability3 reached a high level of 74% in the fourth quarter of 2021, much higher than the 45% in the fourth quarter of 2011.
Drop in home ownership ratio: The proportion of owner-occupier households in Hong Kong decreased from 52.1% in 2011 to 48.6% in 2021, with the proportion of youth households that are owner-occupiers4 falling from 49.7% to 41.5% over the same period.
For further reading: Hong Kong Affordability Ratio