No place like home

Alan Yip lives in Eastern District and Darcy Fung’s home is in Kwai Chung. Typical of their generation, they live with their parents but would prefer to live independently, either in rented flats or ones that they own. Nevertheless, they considerthe likelihood ofbecoming propertyowners to be slight. What options do theyconsider?

Co-living

Alan “There are lots of unoccupied industrial buildings and revitalization of districts should be encouraged. If the government allowed a change in land use, industrial buildings could be converted into housing. The government could also subsidize owners who develop co-living space and lease flats to youngsters for a relatively reasonable price.”

Darcy I would definitely consider co-living either in a hostel or a shared flat, at least for the short term. “I enjoyed staying in a co-living space for two months in Taiwan. If I could have a room big enough for a double bed and a wardrobe, I would be willing to pay HK$6,000-8,000 per month, and I would choose somewhere in Kowloon.”

We had no privacy there. I want to be able to close the door when I go to bed.

Alan “In fact, I think it might be a cool and interesting experience in terms of expanding my social network and living a more independent life. I think a studio flat of 100-150 sq ft, located in the urban area at a cost of HK$3,000-5,000 per month would be reasonable and convenient for working youth.

Increasing housing stock is the ultimate economist’s solution to the question of supply-and-demand. Identifying unoccupied land or non-residential property for conversion into temporary living solutions, in the form of hostel or co-living space, may be a quick win for the short-term.”

Sharing with friends or partners

To conclude the discussion, Darcy and Alan weigh up the merits of sharing flats and the comparative costs of the various options. If given a completely free choice of home companions, Darcy would prefer to live with her friends. Alan says, “I would like to live with my girlfriend - or my future wife and children - to allow myself personal space, but I would also like to stay in a neighbourhood close to my parents.”

Given that independent living, well away from the family home, is considered fairly normal in some societies, especially for those wishing to have children, Hong Kong appears to be an exception. Alan explains this in terms of costs, the size of the territory and convenience. “First, owning your own place just costs too much for most young couples, not to mention the costs of raising children. Second, whereas in most western countries and even in mainland China, moving away from the family home is a natural process if you go to university or work in a different city, most youngsters in Hong Kong go to school or work within the city and staying at the family home becomes a very convenient option.”

Darcy points out that “Paying for housing is a heavy burden for a young family with a kid to feed. On the other hand, I think most parents in Hong Kong are dual income earners. They might choose to stay on in the family home in order to provide better care for their children, as well as to alleviate their own burdens.”

Costs and options

Middle-class Hong Kong parents may plan to help their children put their first step on the home-owning ladder. As Alan says, “Some may offer without being asked. I think most are willing to contribute down-payments ranging from 20% to 40% of the purchase price, either with or without the expectation of the money ever being returned.” Darcy is equivocal. “It depends. Some of my friends’ parents have already bought homes for them, others only offer to settle the bill for a down payment, but others won’t pay anything.”

When presented with two hypothetical situations, one of which meant having independent housing that was a significant drain on their income but where they were free to decide on how space was used, both prefer to have a comfortable home dependent on parents, although Alan notes reservations about continuing such an arrangement after marriage. They are happy to make a contribution to household expenses of an amount they decide on themselves. In general, they consider something between 20% and 25% to be a reasonable proportion of their income to spend on accommodation.

At a time when increasing numbers of Hong Kong people of all ages are considering accommodation options outside Hong Kong, Darcy agrees. “It could be an alternative for me. I think Hong Kong is a good place for work and investment but not a good choice for living. So I might consider moving to another city to work and live. Singapore and Australia both are good choices for me.” While it is unlikely for Alan, given his strong local ties, he says that from a purely professional point of view, it could also be a viable alternative.

Alan Yip and Darcy Fung are members of the HKFYG Youth IDEAS think tank. They worked on the coliving study: Report No 44, 2019. See Youth Hong Kong, September 2019.

Affordability: alternative models

Several contributors to this article say they would consider Singapore as a viable alternative for living or working or both. It certainly has more affordable housing. This year, the Demographia International Housing Affordability Survey ranked Hong Kong as the most unaffordable city in the world for the 10th year running, using a factor called the Median Multiple which divides median home prices by median annual household income to rank affordability. Hong Kong comes out at 20.8 compared to Singapore at an overall figure of 4.6. That means it takes a family 20.8 years of savings to afford a home in Hong Kong. After subsidies, a new home of an average 970 sq ft flat in Singapore costs just 3.3 times the median household income. It is not surprising that 90% of Singaporeans are owner-occupiers: a higher rate than in any other rich country. In Hong Kong the figure is 48.5%, according to the 2016 by-census. It is 44% in Germany and 40% in Switzerland, whereas in Romania, which has the highest figure in the world, it is 96%.

Housing Affordability Ratings

Median Market Australia 6.9 Canada 4.4 Hong Kong 20.8 Ireland 4.7 New Zealand 8.6 Singapore 4.6 United Kingdom 4.6 United States 3.9

The median monthly income ofHong Kong's 20-29-year-olds in 2018 [latest available figures] was HK$15,250. At that time, the average monthly rent in Hong Kong was over HK$21,600. Sources censtatd.gov.hk/hkstat/sub/gender/employment_earnings/ ejinsight.com/20190412-hk-remains-worlds-mostexpensive-housing-market-by-wide-margin/

Read more • fcpp.org/2020/01/19/16th-annual-demographia-international-housing-affordability-survey/ • bycensus2016.gov.hk/en/Snapshot-05.html • economist.com/special-repor t/2020/01/16/housing-is-at-the-root-of-many-of-the-rich-worlds-problems

How much should housing cost?

You may have heard of the 30% rule for expenditure on housing, but this is increasingly outdated because it doesn’t account for expenses that are prevalent today, such as student debt. It also doesn’t account for individual situations, such as how many dependents you have. Families who pay more than 30% of their income for housing are considered “cost burdened” and may have difficulty affording other necessities. The increase in cost-burdened households is driven in part by income inequality and a lack of affordable housing.

What proportion of your income do you spend on your home? Read more nytimes.com/ask/answers/monthly-budget-rent-income