Hong Kong is one of largest cities in the world and it has a major issue with population. It is recognized as a special-administration region in the country of China. While it would be easy to write a paper on the complexity of Hong Kong’s political realm and their future, I thought their population crisis was more interesting. I chose this topic because I have gained a sudden interest of population control and the issues that cities face with mass amounts of people moving to specific areas. It is very interesting to try and trace the issues of population to a single point. While migration and push factors are some of the major reasons population issues occur, Hong Kong’s issue is different – the main issue stems from political jurisdiction and the ultimate economic events that happen after policy is set.
Essentially, Hong Kong is a very aspiring city in the country of China. Since it is a separate administrative entity from China, it is a huge hub for migration and is a place where most people want to relocate to for more democratic freedoms. With a high population and a high demand for real estate, it has become an incredibly challenging place for people to find a place to live. According to Vox reporter, Johnny Harris, Hong Kong is the most expensive place to live in the world and housing prices are about twenty times more than annual income (Vox, 2018). The creation of multiple-housing accommodations is one way the city has tried to fight back to the outrageous real estate prices that are the reality that Hong Kong lives in. These cage houses are essentially portions of a two or three bedroom apartments that are compartmentalized into smaller bed-shaped cages that each resident pays for individually. What is more shocking is the labyrinth of reports that I have heard of how much they cost – a two meter long cage costs literally thousands of U.S. Dollars a month (Youngpost, 2018). It is crazy to think that such living conditions could cost this much let alone be a desired commodity in such a progressive city; however, the main issue isn’t the cost of rent – the main issue is the cost of the property and the reason companies, property developers, and the Chinese government charge such high prices for land usage. Ever since the transition of power over the municipality of Hong Kong from the British Empire to the Chinese Government, Hong Kong has undergone some tough cultural changes that are being imposed from China. China has a plan to assimilate Hong Kong to Chinese culture and it is greatly affecting the very westernized traditions of the Hong Kong people. The issue that is posed to Hong Kong stems from the fact that China is trying to control every facet of the property industry in Hong Kong – this turns into an economic crisis that pushed the price of real estate way up for multiple reasons.
While doing research, I thought it was important to lay out the basics of the issue in Hong Kong. As of 2009, Hong Kong had the third highest population density of 6,352 people per square kilometer, or 58,000 people per square mile (Delang, 2009). With this many people it is expected that the cost of real estate is expensive. It has been agreed upon and proved that “Hong Kong has one of the most expensive and volatile housing markets in the world” and that the city regularly sets world records in price per square foot (Monkkonen, 2011). So it begs the question of why – why does it cost so much to live in Hong Kong? The answer is the government. In China, the government owns all of the land meaning they control who uses it – the Chinese government will often auction this land off on long leases to companies who then will develop housing places that charge high rental prices (Urbanland, 2018). This is a huge issue because the government is in a position where they need money to operate but don’t want to dramatically affect their free market. The Chinese government in Hong Kong doesn’t have a developed tax system and eliminates sales tax, corporate taxes, and others (Vox, 2018). The lack of revenue that the government is missing out on through these taxes has to be made up in another way. The way they make up the difference of money is through land sales. When a plot of land is being sold there, the government auctions it off to the highest bidder – this auction process creates a very dangerous real estate economy because it ultimately ensures that the company with the most money will win the auction and in turn create a very expensive housing unit. In a Chinese media outlet, there was a call to putting an end to the developer domination battle that is constantly occurring so that the people of Hong Kong can afford suitable housing (South China Morning Post, 2018). When there is a constant skirmish for land use, there is usually dramatic economic results and it is evident that this is the case in Hong Kong.
After doing some research on the reason Hong Kong’s housing market and real estate prices are so expensive, it is interesting to find out that the main reason is government policy resulting in greedy property developers. When I originally decided on this topic I thought it would have had something to do with land scarcity, similar to cities like New York City. When I saw pictures of Hong Kong and maps that illustrated how much land was being used for urban development, it was clear that land scarcity is not the issue. The idea that the government leases land for billions of dollars to developers is shocking to me. It is interesting to see how different another countries core values such as property definition can be. Since I live in the U.S. it is a pretty clear difference between public and private land; however, in Hong Kong it is all owned by one entity which causes it to be astronomically high. While there are hundreds of companies that are involved in developing on the land in Hong Kong, the main property industry is essentially a monopoly. It forces companies to pay high prices for land because if they don’t lease land from the government they can’t lease land from anywhere. This is clearly an issue that needs to be resolved. I think the government in Hong Kong relies too much on property sales and needs to open the possibilities of other government revenue such as sales tax or higher corporate taxes. While yes, Hong Kong does have one of the top ranked free market economies, it is greatly suffering when it comes to the people who are trying to contribute to that economy and I think at some point a government needs to take care of its people first.
In conclusion, the issues regarding Hong Kong’s population are ultimately economic issues that trace its way through the property development industry and all the way to the Chinese government. It is an economic cycle that stems from the government’s policies all the way down to the people of the city and gets more and more expensive every step of the way. The government auctions land to developers who contest other developers off with billions of dollars for leasing rights. After assuming the costs of construction and the astronomical property costs, these developers are then forced to charge insanely high costs for residential rentals. Hong Kong has a long way to go in order to fix this issue – they have tried some policy changes to help mitigate this high price society but it is going to take big administrative change before anything significant happens in favor of Hong Kong’s residents.