Young Hong Kong graduates face uphill struggle to afford home as study finds buying power slashed by almost half over past 20 years

The median home buying power of Hong Kong’s young graduates has been slashed by at least half over the past two decades, a think tank study has found.

The New Youth Forum warned that the findings risked putting the dream of home ownership out of reach for many young people.

“Housing prices are now at a very high level. Unless there is a very big adjustment, buying a flat would be a very heavy burden or an extravagant wish for the younger generation,” forum chairman Cliff Tang Wing-chun said.

Figures from the Census and Statistics Department and Rating and Valuation Department were used to review trends in home prices, as well as the monthly income of young people aged 20 to 24 and 30 to 34 with a university degree.

For those aged between 30 and 34 last year, their home purchasing power was cut by 49 per cent compared with young graduates in 1997. Photo: Edmond So

Home purchasing power was measured by dividing their median monthly salaries by the government’s home price index from 1997 to 2022 for graduates aged 30 to 34, and from 1987 to 2022 for graduates aged 20 to 24.

The study period for the older group started in 1997, because it took 10 years for those aged 20 to 24 to hit that range.

The purchasing power of young people aged between 20 and 24 in 2022 was down by 72 per cent when compared with 1987. The ability to buy was reduced by 39 per cent if compared with 1997 figures.

For those aged between 30 and 34 last year, their purchasing power was cut by 49 per cent compared with young graduates in 1997.

Ben Cheung Pui-yin, a research consultant with the forum, said young people’s decreased ability to afford a flat was caused by a rapid rise in property prices over the past few decades, not a reduction in their monthly income.

He highlighted a study released by the forum on Monday, which found that salary levels for university graduates aged between 20 to 24 had increased in recent years.

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The analysis found the median salary for graduates aged 20 to 24 rose to HK$17,424 (US$2,224) a month last year from HK$15,856 in 2017, a 9.8 per cent increase.

The figure for last year was the third highest across the 35-year period from 1987 to 2022, comparable with new graduate earnings of HK$17,426 in 1997.

The lowest level over the time frame was HK$14,796 in 2012.

“Primarily for those between 30 to 34, their needs to purchase a property are more urgent than those aged between 20 to 24, who have just graduated and entered society,” Tang said.

“For those in their 30s, the demand for them to raise a family, get married or have children is much larger. If their income cannot chase after home prices, it is even more desolate.”

Hong Kong homes remain unaffordable for most city residents despite the city housing market remaining in a slump. Multiple headwinds, including the economic outlook, high interest rates and a glut of new flats, continue to depress buyer sentiment.

Lived-in home prices fell 1.4 per cent month-on-month in August in the fourth straight monthly decline, an index compiled by the Rating and Valuation Department showed.

Hong Kong mortgage easing yet to lift secondary market out of rate hike gloom

A 436 sq ft flat in Tseung Kwan O town centre sold for more than HK$6.38 million earlier this week.

That translated to about HK$14,600 per sq ft, a major real estate agency said.

The forum appealed to the government to increase the supply of subsidised flats and to diversify the economy with new industries in the innovation and technology sector, which would offer more high paid jobs for young people.

Tang said he opposed recent calls from developers for property cooling measures to be lifted, despite the downturn in the housing market.

He maintained falling prices were a signal that new home prices were returning to normal levels.

Financial Secretary Paul Chan Mo-po last gave the strongest hint that authorities might soon ease property cooling measures introduced in 2010.

He said that the situation the housing market faced at present was different to when the curbs were introduced.

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