Higher divorce rates, young professionals’ aspirations and longer life expectancy are demand factors that have increased in importance in the past decade
Property prices in the city have shown little sign of a significant fall, whether amid the social unrest last year or the trying times of the pandemic this year. Property analysts commonly attribute the robustness of prices to easing monetary policy, a lack of housing supply and, according to conventional wisdom, persistent demand largely from newly married couples and immigrants to Hong Kong.
Monetary policy and the shortage of housing supply as factors are well-established. However, marriage and immigration only account for part of the rising demand for homes. About 60,000 annual residential property transactions have been registered in the past few years in Hong Kong, the majority for personal use. This steady demand is also attributable to changes in marital status, youngsters’ aspirations and longer life expectancy in an ageing society. These are factors which have increased in importance in the past decade but may have been underestimated, and are also supporting property prices in Hong Kong.
Divorce cases increased more than threefold from 1991 to 2018. From 2010 to 2018, the number of divorce decrees granted each year remained steady at around 20,000. This could result in 20,000 units of new housing demand because either of the divorced individuals would move out of their married home to secure a new one if they could afford it.
Hong Kong enrols about 20,000 full-time undergraduate students each year. Nowadays, young people look for a life independent from their parents after graduation. Reports suggest many parents are providing the down payment on property for their newly graduated children just starting their careers. In the past, this demand would mostly come into play later, when the children got married. This trend has accelerated and is likely to continue.
Finally, Hong Kong has one of the highest life expectancies in the world. Hongkongers could expect to live to about age 85 on average in 2019, compared to below 80 before 2000. This statistic seems to imply that flats are becoming available to younger generations later in their lives. This is boosting demand from younger members of the family.
Given all these additional factors, the actual support for housing prices in Hong Kong appears to have been underestimated.
C.P. Lee, Causeway Bay.
South China Morning Post
