Michael B. Wong

Opinion | Hong Kong’s economic recovery hinges on having enough adequate housing

Housing and town planning reforms will raise social mobility, promote Hong Kong as an international talent hub and bring back our dynamism

Reading Time:3 minutes

Why you can trust SCMP

Queen’s Hill Estate in Fanling on August 03. About 5,000 Hong Kong public flats have been taken back in the past two years from well-off tenants, including those whose luxury cars exposed their financial situation and 12 others owning properties across the border, authorities have revealed. Photo: Edmond So

Michael B. Wong

Published: 4:30pm, 9 Aug 2024Updated: 7:17pm, 9 Aug 2024

Between 2018 and the end of 2023, the world’s GDP increased by 13 per cent. Singapore’s increased by 12 per cent, while Hong Kong’s fell by 3 per cent. A year and a half after the end of the Covid-19 pandemic, Hong Kong’s economy is still sputtering. This malaise is attributable to long-term trends such as population ageing and a lack of new industries.

To grow Hong Kong’s economy, the government has instituted subsidies for research and development with the aim of creating new industries. It has also rolled out an array of measures aimed at attracting talent to the city.

So far, these policies have not had the desired effect. Real investment in Hong Kong’s machinery, equipment, and intellectual property has fallen from HK$278 billion (US$35.7 billion) in 2012 to HK$173 billion in 2023 despite the spending on innovation subsidies during the past 10 years. The labour force grew just 0.4 per cent between May 2023 and May 2024 despite efforts to attract more talent.

The fundamental problem with Hong Kong’s economy is that it does not have enough housing. Consider the choice that talented immigrants face.

According to the Urban Land Institute, Singapore’s average rent per square metre is 86 per cent of that in Hong Kong. The rents in Beijing, Shanghai, Shenzhen and Guangzhou are 52 per cent, 44 per cent, 39 per cent and 27 per cent of Hong Kong’s. If rents are significantly cheaper in competitor cities, why would talent move here?

Despite a lull since 2019 and falling prices amid rising interest rates, residential rents in Hong Kong are going up again. From May 2023 to May 2024, the rent index for units smaller than 1,000 sq ft increased by 5.5 per cent. This suggests Hong Kong’s housing shortage is deepening once more.

13:00

How Hong Kong's housing market became among the world’s most unaffordable