Millennials’ asset focus keeps HK homes pricey

The great land debate initiated by the government in the hope of reaching a public consensus focuses almost entirely on creating land to build public housing. It has ignored the view put forward by an increasing number of economists and property experts — that rising home prices are only a symptom of a much deeper social problem that cannot be solved by increasing supply.

Indeed, generations of Hong Kong people have faced a housing shortage for as long as anyone can remember. As a result, housing has never been seen as affordable, even after falling an average 60 percent in the months after the outbreak of the Asian financial crisis in 1997.

Only in recent years has the problem fueled widespread public discontent that is threatening to tear the social fabric apart. The perceived failure of government efforts to combat rising property prices by increasing land supply has undermined public confidence, creating the false impression in the minds of many potential homebuyers that if they don’t buy now, they will never be able to afford it later.

The root of the problem lies not so much in the short supply of properties but in the belief by many younger people that the only way they can hope to grow their investment is through property ownership. That, according to many economists and social analysts, is common among Millennials — those born after 1980 who came to adulthood and joined the workforce at the turn of the millennium.

Like those in many other developed economies, Hong Kong Millennials are denied the economic opportunities enjoyed by their predecessors during the high-growth era of the 1970s and 1980s, when the manufacturing industry reigned supreme.

Life was not necessarily easier then. But the low capital and technical requirements for new startups in manufacturing gave hundreds of thousands of young factory workers something to look forward to, despite the hardship.

Hong Kong succeeded in making the transition to a service-oriented economy in the 1980s. Manufacturing jobs that require at least some basic skills have been largely replaced by those in the services sector that demand few or no skills. What’s more, opportunities for advancement in service sector jobs, other than finance, are usually limited.

The dominance of the highly capital-intensive finance and property industries in generating

Unsurprisingly, more and more Millennials have come to the conclusion that asset acquisition is the only way to move up the economic ladder.

growth has led to increasing concentration of wealth in the hands of the owners of capital and assets. As a result, the vast majority of Millennials are finding that social and economic mobility is becoming increasingly restricted.

Unsurprisingly, more and more Millennials have come to the conclusion that asset acquisition is the only way to move up the economic ladder. People wonder why young couples were willing to put all their savings into down payments for those “nano” apartments with an average floor area not bigger than 15 square meters (161 square feet) each. The answer is simple: They believed owning an asset, any asset, is the only way to start accumulating wealth.

For that reason, some economists have put forward the argument that the government’s housing policy should give special consideration to first-time buyers, or young people who don’t own any property. The idea is to make them feel they will be given an opportunity to buy a government-built apartment at subsidized prices. Without such assurance, the demand by young people for apartments will continue to outstrip supply irrespective of how much land the government can create.

The alternative is to restructure the economy by promoting the growth of the technology industry. But such an endeavor would take many years to bear fruit and success is far from assured despite intensive government efforts.

Some politicians and business leaders have advised young people to devote their time and energy to self-improvement rather than being too obsessed with homeownership. Such advice, while sounding reasonable, tends to gloss over the frustrations of many Millennials who, for good reason, think they’re being shortchanged.

Compared with their predecessors, they are.