The Government requires land developers to pay a significant land premium. As a result, virtually only the largest property developers could acquire the financing to clear the land premium hurdle, which severely increases the downstream housing prices. Given Hong Kong's low tax rates on income and the lack of sales taxes, large land premiums are often necessary for the Government to finance its public services. According to a study by the Federal Reserve Bank of Dallas, if one were to remove land premiums from the Government's revenue intake, the budget would be in a deficit since 2008. Moreover, under Hong Kong and Chinese law, all land, with very limited exception, belongs to the government, and all land provisions are based on a leasing system. As a monopoly, there is an incentive for the government to release limited amounts of land at a time, so as to keep prices high enough to finance the city's services.

With the Hong Kong Dollar using a currency board system to keep it trading within a tight band for the United States Dollar, the Hong Kong Monetary Authority (HKMA) keeps its base interest rate in lockstep with the U.S. Federal Reserve. After the financial crisis in 2008, the Federal Reserve has kept its base rate at approximately 0.5%, which is extraordinarily low. Given the HKD - USD peg, the HKMA followed suit. With this low interest rate, real estate speculators could borrow large sums of money to purchase property, driving prices quickly unaffordable for regular residents.

According to a Legislative Council report, the number of public rental housing (PRH) units completed from 2017 to 2021 have decreased. This, in turn, has led to a sharp increase in PRH waiting times, reaching a record of 6 years by June 2022. The Government has looked into solutions in attempts to build more public housing, but is faced with land shortfalls. In the "Hong Kong 2030+: Towards A Planning Vision and Strategy Transcending 2030" report by the Planning Department, Hong Kong is forecasted to have a land shortage of approximately 3,000 hectares from 2019 to 2048. To alleviate this issue, the Government is looking to expand available land through the Kau Yi Chau Artificial Islands and Northern Metropolis programs, but these are still a long way away from materializing.

Large numbers of lower-income residents live in public rental housing (PRH). There were roughly 860,000 PRH units tabulated in 2023. There are strict criteria to be eligible for PRH, with low income and net asset limits. Unfortunately, for those who just exceed the income and asset limits, there is a severe lack of lower-end, affordable housing. There is also very little incentive for property developers to cater to this segment of the population, given high land premiums and the inability to recoup much of their investment from this particular group. As a result, competition for these "lower end" housing is fierce, and drives up their prices to the point of unaffordability.

Hong Kong's poverty rate is measured by a poverty line, which defines a household as impoverished if it receives 'less than 50 percent of the median household income before tax and welfare transfers.' Here, I've plotted both the pre-intervention and post-intervention figures over time. From 2009 to 2020, the number of people in poverty has stayed roughly stagnant at around 1.4 million (pre-intervention), and has in fact increased to over 1.6 million by 2020. Unfortunately, as the Government is currently revising how it is measuring poverty, there is no more recent data. But given the effects of the pandemic and the recent economic downturn, these numbers may be even higher than reported here.

Even adjusting for population, we see that the poverty rate has not decreased significantly over time. We can see from the pricing analysis page that nominal median incomes have risen from approximately $17,500 to $30,000 from 1999 to 2023. Given the dynamic poverty line, it is possible that a constant portion of the population remains below the line. However, we know that purchase and rent prices have risen far more rapidly than incomes; thus, even if nominal wages for those under the poverty line have scaled up over time, it is nowhere close to alleviating affordability issues.

Finally, we take a look at the poverty gap over time, which is defined as the average amount an individual / household is below the poverty line. In nominal terms, we see that the gap has increased quite significantly over time, for both pre- and post-intervention. In real terms, after adjusting for inflation, we see that there is still a slight increase in the gap. It appears that incomes for impoverished individuals and households are increasing over time, but not fast enough to decrease the real, inflation-adjusted gap.

The graph illustrates a dramatic increase in the average price per square meter of residential properties in Hong Kong from 1999 to 2024, categorized by unit size. In 1999, properties under 40 square meters were priced at under HKD 100,000 per square meter. By 2024, this figure is projected to reach HKD 150,000 per square meter, marking a swift 50% increase. Similar trends are observed for units between 40 to 69.9 square meters, also expected to reach HKD 150,000 per square meter. Larger properties have seen even steeper escalations: units between 100 to 159.9 square meters are projected to cost approximately HKD 200,000 per square meter, while those over 160 square meters may soar to around HKD 250,000 per square meter.

This substantial rise in housing prices starkly contrasts with the relatively modest growth in median monthly household income, which has increased from HKD 17,500 in 1999 to just HKD 30,000 in 2023. While property prices have surged by 50% to 150% depending on the unit size, median incomes have grown by only about 71% over nearly 25 years. This growing disparity underscores a widening affordability gap in Hong Kong's housing market.

The graph indicates that the number of private housing units is expected to increase at a rate surpassing that of population growth. At first glance, this seems promising—it suggests a potential easing of the housing shortage, with more homes available relative to the number of residents. But despite the private housing stock outpacing population growth, existing shortages cannot be remedied by this trend alone. One significant reason is the cumulative deficit from years of inadequate housing supply, which has led to a persistent backlog in demand. Simply adding new units doesn't immediately alleviate the pressure on the market, especially when the initial shortfall is substantial.

Moreover, the crux of Hong Kong's housing problem isn't just about the number of units but also affordability and accessibility. The increase in private housing does not necessarily equate to affordable options for the average resident. High property prices, driven by speculation and investment, mean that new units might remain out of reach for many, perpetuating the issue of inadequate housing for lower and middle-income families.

Additional problems include the distribution and type of housing being developed. Luxury apartments or small-sized units may not meet the needs of larger families or those seeking more affordable options. There's also the consideration of living conditions—overcrowding and the prevalence of subdivided flats highlight that the quality and suitability of housing are as critical as the quantity.

My name is Tianzong Zuo, and I'm a senior at Hong Kong International School. Growing up in the heart of Hong Kong, I've always been captivated by the city's dynamic energy—the towering skyscrapers, the bustling streets, and the blend of Eastern and Western cultures. However, beneath the surface of this vibrant metropolis lies a pressing issue that affects millions of residents: the challenging housing situation.

My interest in this complex problem was ignited during my AP Economics class last year. As we explored concepts like supply and demand, market equilibrium, and the impact of government policies, I began to see the real-world applications of these theories all around me. The discussions about economic disparities and resource allocation resonated deeply, especially when I considered how they manifested in my own city's struggle with housing affordability.

Determined to delve deeper, I started researching on my own time, reading articles, reports, and studies about Hong Kong's housing market. I was struck by the intricate web of factors contributing to the crisis—limited land supply, high demand, policy decisions, and global economic influences. It became clear that this wasn't just an economic issue but a social one that touched on quality of life, family stability, and opportunity.

I wanted to contribute in a meaningful way, leveraging my passion for data analysis and my growing understanding of economics. That's when the idea for this website was born. I envisioned a platform where complex data could be transformed into accessible insights, helping others grasp the magnitude and nuances of the housing situation. By visualizing statistics and trends, I hoped to make the information not only understandable but also engaging.

One of the driving forces behind this project is my desire to raise awareness among my peers and the wider community. I believe that education is the first step toward change. By highlighting the factors that contribute to the housing crisis, I hope to spark conversations that could lead to innovative solutions. It's been encouraging to receive feedback from classmates and teachers who have visited the site and expressed newfound understanding and concern.

Moreover, this project has shown me the power of combining technology and social issues. In today's digital age, we have incredible tools at our disposal to communicate and collaborate. I plan to expand the website further by incorporating interviews with experts, sharing personal stories from affected families, and perhaps developing a forum for students to discuss and propose ideas. I'm also considering organizing workshops or presentations at school to foster a deeper dialogue.

Working on this initiative hasn't been without its challenges. Balancing schoolwork, extracurricular activities, and this project has required time management and dedication. I've had to teach myself new skills, like web development and advanced data visualization techniques. However, every obstacle has reinforced my commitment to the cause and my belief that young people can make a difference.

Ultimately, my goal is not just to inform but to inspire action. I hope that by shedding light on Hong Kong's housing challenges, others will feel empowered to get involved, whether that's through advocacy, volunteering, or further research. This experience has solidified my interest in economics and social policy, and I'm excited about the possibilities of continuing this work in the future.

This website is just one small glimpse into a multifaceted problem, but I believe it's a step in the right direction. I plan on expanding it further, continuously updating it with new data and insights. More importantly, I aim to keep learning and engaging with the community to contribute positively to the place I've always called home.