The multi-decade boom in Hong Kong real estate has been underpinned by continuous population growth, economic progress, government-controlled land auctions and the developers’ strategy of hoarding homes to control prices.
Most economists regard a buoyant home market as a reflection of economic prosperity, income growth and a robust inflow of capital, but the situation of Vancouver tells us a strong home market is not always a good sign.
I came across a report titled “The Decline of Vancouver” on the Tumblr microblogging platform last month.
The Canadian city has long been admired for its livability by Hongkongers and many others elsewhere, but the article says home prices that have soared way above income growth are denting Vancouverites’ confidence in the city’s future.
In the past 20 years, the average price of a detached house in the city rose an average of about C$100,000 (US$82,125) per year, but the income of a typical middle-class family has been stagnant over the past decade, hovering near C$65,000 per year.
These figures mean that the city’s red-hot property market is off-limits for people with income from a job but no capital.
The contrast and alienation between property owners, with their high-flying lifestyle, and those who are excluded from homeownership by exorbitant prices and have to tighten their belts just to rent a place to live is unacceptable to a society that values equity and justice.
Talent from other places won’t want to come to Vancouver, as they are deterred by the high costs and cramped living environment.
At the same time, some locals may choose to leave for the same reason.
Given time, Vancouver will lose its talent pool to its competitors.
This article appeared in the Hong Kong Economic Journal on April 15.
Translation by Frank Chen
[Chinese version 中文版]
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