An expensive rental lesson
“When you’re living on a shoestring budget, even (an extra) HK$100 a month makes a difference,” Dai said. “And to save money, I didn’t even hire a van when I moved,” she said. “I packed everything and moved all the boxes piece by piece until 3 am.”
Eventually, many recent cross-border graduates find the cost of living in Hong Kong isn’t worth the trouble. Julia Zhu, originally from Hangzhou, made that decision after she graduated from Hong Kong Baptist University with a Master’s degree in 2009. Zhu worked for local newspapers for three years, before throwing in the towel and returning to her hometown in late September 2012.
“I am glad that I can finally leave the less than 100-square foot subdivided flat in Quarry Bay where I had lived for over two years,” she said. In the beginning, Zhu paid HK$3,800 per month for her lodging, one of five independent flats that were sub-divided from an original apartment. A year later, the rent increased to HK$4,000 and the landlord wanted to increase it again right before she left.
Zhu earned only HK$8,000 per month on her first job in Hong Kong, and by the time she left, she was earning about HK$15,000 per month. She left with hard feelings. “The city has really disappointed me,” she said.
More rental hikes likely in 2013
Residential property prices in Hong Kong frequently hit new records in 2012 due to the low interest rate environment and further quantitative easing launched by central banks, according to Cushman & Wakefield. The city’s overall residential property prices increased by 12 percent in 2012 and are expected to rise another 10 percent in 2013.
Rent is likely to continue to climb in 2013, in turn. Vincent Cheung, National Director Greater China at Cushman & Wakefield, said he believes that rent for small to medium-sized residential properties may increase by at least 5 percent this year.
The city’s high rental level sometimes is beyond the affordability of most young people and has been making it very difficult for non-local graduates to settle down and make long-term contributions to the city.
“If the situation continues without any improvement, it will damage the competitiveness of Hong Kong,” said Eddie Hui, a professor at Hong Kong Polytechnic University’s Department of Building & Real Estate.
Hui said that most of the time, young people who just graduated from university are paid little, so they can only spare small amounts of money after paying high rents, and if their pay raises cannot catch up with rental price increases, it will be hard for non-locals to stay in the city.
He said the Hong Kong government should commit more resources to meet the demand of young people, like providing rent subsidies for those who have just graduated from schools and started to work. The government could also increase housing supply specifically targeting young people and build dormitories for young single people.
Hong Kong’s housing issues have received increased scrutiny of late. Chief Executive Leung Chun-ying said in his maiden Policy Address in January that his administration’s top priority would be tackling the growing housing problem.
The Hong Kong government in October 2012 unveiled its toughest efforts yet to curb home prices, by imposing a 5 percent rise in punitive stamp duties —10 to 20 percent on short term home resales within a three-year period — and an additional unprecedented 15 percent Buyers’ Stamp Duty (BSD) on home purchases by companies and non-Hong Kong permanent residents.
Admitting that the housing supply shortage is the reason property prices and rentals had risen substantially, Leung also unveiled a multi-prong approach to boost land supply in his policy address, promising to help grassroots families move into public housing and middle-income families to buy their own homes
The government’s efforts are expected to translate into 160,000 new home-supply units, a figure much higher than the 125,000 units built in the last five years.
