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'Generation rent' in a bind

Published on Thursday, 09 Dec 2010
Illustration: Bay Leung

Rising property prices in the past few years have made home ownership an ever more elusive dream among members of "generation rent" - young professionals who, despite a decent job and a regular income, cannot afford a flat.

In a survey by the Federation of Trade Unions, about two-thirds of the 756 respondents said they had to rent a flat because they were priced out of the market.

"It is very difficult for young people to buy a flat, as property prices have almost doubled over the past few years," says Vincent Wong, a real estate agent in the New Territories.

Joe Kwan, a sales director of Century 21 Trusty Realty, says: "Rental rates are shooting up by over 20 per cent a year."

Many young people who rent homes in urban districts are looking to rent new and smaller flats in the New Territories, he adds.

A 30-year-old manager at an electronics company, who requested anonymity, says she and her husband - also a mid-level manager - have been struggling to find an affordable apartment that suits their needs.

Planning to have a baby, the couple have been looking in vain for a three-bedroom apartment for about HK$3.5 million. "The financial burden of buying a flat would be enormous," she says. "We would have to spend the bulk of our income on the mortgage. That means we wouldn't be able to switch jobs or try another career path any time soon."

She says prices of their shortlisted targets have surged to HK$5 million. "I think it is normal for people to feel aggrieved. After working hard to reach mid-level management, we still struggle with paying the deposit."

Raymond So Wai-man, dean of the school of business at Hang Seng Management College, says that young people have higher expectations than their parents. Many prefer new flats and are unwilling to settle for the cheaper, second-hand property market.

So adds that income levels in Hong Kong should allow young people to get a foothold in the property market as long as they have a savings plan and adhere to it.

"Let's say a fresh university graduate earns HK$12,000 a month. When he is in his late 20s or early 30s, his salary should reach more than HK$20,000. If he has a partner with comparable wages, then the couple would be earning HK$40,000 to HK$50,000 a month," he says. "I think young people can afford their own homes if they don't aim too high and fine-tune their expectations to a reasonable level."

Some young professionals no longer aspire to home ownership. Helena Kwong, a 33-year-old social worker, has no qualms about renting.

"The property market is controlled by developers. So why should I let them control my life?" says Kwong, who recently spent her savings to enrol in a master's course. "I don't need to own a property to feel secure. I prefer to invest in education for happiness and personal enrichment."

Perfect location may be parents' home

  • Pick the right location Flats in new districts, such as Tseung Kwan O, Ma On Shan and Yuen Long, are young buyers' favourites. "Prices range from HK$2 million to HK$3 million, and sizes are 400 sqft to 600 sqft," says Crystal Lam of Centaline Property.
  • Be realistic Many first-time buyers prefer new flats and a modern clubhouse with high-quality facilities, says real estate agent Vincent Wong. "But don't overstretch your budget for a clubhouse in which you are not going to spend much time," he adds.
  • Get parental help Don't worry about staying with your parents. "I've been able to save several thousand dollars a month since living with my parents, as I don't have to pay rent and often take leftovers from dinner to work the next day," says Agnes Tsang, a 28-year-old logistics officer. 


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