Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Hong Kong is cracking down on richer tenants living in highly sought-after subsidised public housing, as the Chinese territory faces increased pressure from Beijing to widen access to affordable homes in one of the world’s most expensive property markets.
Authorities are targeting households whose assets exceed government limits. The income ceiling for a four-person family is HK$30,950 (US$3,970), and they should have net assets no greater than HK$590,000. Average rents for social housing properties are HK$2,297.
The government has hired retired police officers to investigate tenants — some of whom have been seen driving Mercedes-Benz and BMW luxury vehicles — and are planning to offer bounties for tip-offs.
“Possession of expensive vehicles, especially shortly after
commencement of public housing tenancy, is one of the important clues in
detecting abuse,” a housing department spokesperson told the Financial Times last month, adding that officials had been inspecting housing estate car parks in response to complaints. In some cases, tenants were evicted after it was confirmed they had made false income or asset declarations.
Hong Kong, one of the world’s most unequal cities, has one of the most unaffordable housing markets. The ratio of the median home price to median household income was nearly 19, according to data last year from the Urban Reform Institute think-tank, far higher than in Singapore, the UK and the US. Beijing has claimed that tensions over the high cost of living contributed to citywide pro-democracy protests in 2019.
More than a quarter of the territory’s 7.5mn people live in subsidised public housing. Apartments vary in size, but the Hong Kong government recommends that flats for more than two people should be at least 280 sq ft. Waiting times for homes are almost six years.
In addition to social housing, more than 200,000 people in Hong Kong live in subdivided units known as “coffin flats”. Most are 140 sq ft or smaller, with average monthly rents of about HK$5,000.
Public housing in Hong Kong “acts as a key stabiliser” and safety net for low-income workers in a very expensive city, said Heron Lim, a Moody’s Analytics economist.
Hong Kong has also come under increasing economic strains as demand for land — the sale of which has accounted for about a fifth of annual government income — has fallen amid slowing growth and a property sector crisis in China.
Declining government revenues and rising construction costs have hit the territory’s ability to provide social housing, and authorities in Hong Kong and Beijing have put pressure on tycoons and developers to provide more affordable housing.
House prices in Hong Kong have fallen more than 20 per cent since the US Federal Reserve began raising interest rates in 2022, prompting banks in the territory — whose currency is pegged to the US dollar — to raise mortgage rates, depressing demand.
But house prices still remain high relative to income. The average price of a 430 sq ft apartment in Hong Kong is about HK$5mn.
Authorities plan to increase public housing rent by 10 per cent this year, in part to raise funds to cover the construction of more than 146,000 new public housing units over the next five years.
Authorities are embroiled in a legal dispute with a private golf club over a plan to convert part of its land into more public housing.
Over the past two years, authorities have also reclaimed about 5,000 flats from tenants. “These [rich] people should simply not be allocated public housing in the first place,” said a public housing tenant in his 50s after officials inspected his housing estate.