Google has just released the top 10 search topics this year but they’re nowhere as interesting as those you’ll find at a typical middle-class Chinese dinner table.
Daughter: “Dad, why didn’t you buy a flat?
Son: “Right. We missed the SARS bottom. And again during the financial tsunami. Why?”
Dad: “… ah… uh…”
It gets more upper-middle class when you substitute “a flat” with “another flat” — and a whole new picture of Hong Kong starts to emerge.
You begin to see people who feel left out of Hong Kong’s big, bad rent rush.
According to the Rating and Valuation Department, Hong Kong rents have surged 70 percent in the past five years. Its overall private residential index, a measure of housing rental, has climbed to 160.7 from 96.1 five years ago.
The rate of increase has outstripped wage growth which has risen an average of 25 per cent, according to Ming Pao Daily.
In some residential areas, rents have risen even faster. The smallest unit in One Sha Tin City – 284 square feet – commands HK$12,000 a month, double the rent five years ago.
By comparison, Singapore has seen a 15 per cent increase in rental over the past year. Other countries such as Germany and certain parts of the United States cap annual rental growth at 15 per cent.
Housing has returned to the spotlight as a leading social issue just days after the street protests ended on Monday.
Today almost all newspapers splashed on a government proposal to add 10,000 new flats to the 480,000 units under a 10-year plan.
It’s doubtful such an ambitious target will be met. Even in a best-case scenario, it’s unlikely housing prices will come down as quickly as they have risen.
Apple Daily was quick to criticize the plan which it called “desperate”.
It said the number of subdivided flats has jumped nearly 30 per cent to 86,000 units in the past 18 months but has had no effect on rents.
Obviously, a “pay more, live small” approach to the housing problem won’t work. Now, the government is planning to sell newly built public housing flats to low-income families at a discount.
That might work but a more creative solution is needed.
In Singapore, residents who bought public housing (usually with their pension fund as down payment) could lease part of their home to tenants after five years.
Singapore public housing is much bigger with three to four bedrooms, but the notion of a landlord living with a tenant can be an innovative version of our subdivided flats.
Perhaps we can also learn from the Koreans. In exchange for a two-year rent-free period, a tenant can pay the landlord the equivalent of half of the market price of the property as down payment.
This offers a bridge for tenants who have not saved enough for a full down payment on a flat and allows landlords to unlock value from their property for other investments.
But back to the conversation at the dinner table.
We have a few words to put into the father’s mouth: “How I wish Tung Chee-hwa were back. He once caused the housing market to dive 60 per cent.”
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