Covid-19 worsens crisis in world's most unaffordable housing market

Hong Kong

IN Hong Kong - the world's most unaffordable housing market - rents are staying exorbitantly high despite the global pandemic and a severe recession, threatening to add a new source of discontent after months of political turmoil.

Hong Kong's economy is forecast to shrink as much as 8 per cent this year, and its unemployment rate is near a 15-year high at around 6 per cent. Yet, home rents remain one of the world's most expensive despite pulling back about 9.2 per cent in August from the previous year. High rents combined with the surge in joblessness are making it harder for blue-collar workers and those on the fringes of poverty to find and hold on to even meagre living spaces.

Housing inequality has long been a hot-button issue in Hong Kong, where tens of thousands live in tiny subdivided flats that are sometimes so small that they are called cage-homes. The added housing difficulties fuelled by the pandemic put further pressure on the administration of Chief Executive Carrie Lam, which is struggling to regain the trust of millions after the imposition of a national security law that has tightened Beijing's grip on the city.

In the Tsim Sha Tsui district, home to luxury boutiques and glittering high rises, Herman Wong offers a look at how the pandemic has fuelled a deterioration in living conditions for many.

The 55-year-old resident lost his job at a vegetable delivery company last year when the political protests disrupted business, and has struggled to find a new one during the pandemic. He had been commuting from a one-bedroom apartment in Shenzhen, the nearby Chinese city, rented for 4,200 yuan (S$841) a month, but got kicked out in April and ended up back in Hong Kong - on the streets. A non-profit helped him apply for a government subsidy and he now shares a 60-square-foot hostel room for HK$5,000 (S$877) a month. It fits two beds in a space that is half the size of a carpark, and the windows must remain shut because of rats and smells.

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Yet, Mr Wong fears even that might soon become unaffordable. "We could only afford the room because tourism is down due to the pandemic," he said. "I'm afraid that I'll have to find somewhere else to live if rents go up." He feels the government is not doing enough for people in his situation, who he says are "being abandoned".

A Hong Kong government representative said its departments are doing their best to support street sleepers through non-governmental organisations (NGOs), hostel rooms and provisions for other necessities such as haircuts, meals and bathing. The social welfare department has also added measures to broaden assistance to the unemployed during the pandemic, the government said.

In a mid-year study, real-estate services provider CBRE Group reported that Hong Kong remains the world's most expensive place to buy a property. Monthly average rents in the city stayed the world's third-highest after New York and Abu Dhabi.

Hong Kong's rents were estimated by CBRE to be 7 per cent below New York's last year, but they are more unaffordable because Hong Kong's median income is just 35 per cent that of New York's, showed calculations by Bloomberg based on latest government data. Abu Dhabi ranks high because of expats who pay high rents for large homes, although locals benefit from government subsidised housing.

In Hong Kong, the number of "street sleepers" approached by NGOs rose to 1,423 during the period April 2019 to March 2020, from 1,297 in the previous year, said a spokesman for the Social Welfare Department. While that reflects the number helped by the non-profits, it does not count all of those without homes in Hong Kong.

Although the city's homeless population appears small compared with New York or San Francisco, it does not reflect those living in "inhumane" spaces that are not safe, said Jeff Rotmeyer, founder of ImpactHK, an NGO that provides shelter and meals to those without homes. "The truth is you have hundreds of thousands of people living in spaces that are less than 100 square feet, coffin homes, cage homes," he said.

The situation seems to have become worse during the pandemic and he sees new faces almost every day when he does his outreach walks, including those of younger people, who gather on rooftops, tunnels and footbridges because they do not have living space, he added. Hong Kong's government is also seen to be doing less to help protect renters compared to other big cities.

In the US, the Centers for Disease Control and Prevention have temporarily halted residential evictions to prevent the spread of Covid-19, while in London, the mayor has called for a two-year rent freeze in the capital.

Despite the drop in Hong Kong's overall private residential rents in the past year, the plight of the underprivileged did not improve. The average rent for a bed space of 18 square feet rose 15 per cent in August from a year earlier, said a recent report by Society for Community Organization, a non-profit group.

A survey included in the report also showed that almost half of the 439 respondents living in subdivided or cage homes said their landlords raised their rents in the past three years.

A majority of the respondents also considered their rents expensive.

Hong Kong's homeless situation has worsened during the novel coronavirus pandemic as low-wage workers from cleaners to restaurant staff have lost jobs, said Ng Wai Tung, community organiser at Society for Community Organization.

While there have been subsidies given to businesses, less has been done for the homeless, many of whom face a waiting list for hostels and rising hostel rents, he said. "They feel helpless and hopeless," he added.

A study by the non-profit group found that 36.5 per cent of 104 respondents said they started to become homeless this year.

Living conditions for some of those already homeless in Hong Kong have also worsened. Some who had been camping out at McDonald's, or so-called "McRefugees", lost that place of refuge as social distancing rules limited the hours of food outlets. That has pushed many out on the streets. BLOOMBERG