Despite being a prosperous city and a major international financial center, Hong Kong has been suffering for decades from a terrible housing shortage for its inhabitants. Citizens can’t have access to a decent home with basic conditions for living due to overpopulation, lack of good quality land to build homes and buildings, and the absence of state investment, which has resulted in rising prices in the real estate system.
The quality of life of Hong Kongers has declined considerably, and people are living in tiny and costly spaces, reported South China Morning Post.
These small spaces, which have caught the world’s attention for resembling a cage or a coffin, were the only solution people could find to the severe problem.
According to Reuters, about 100,000 of the city’s 7 million people live in tiny cages or coffins of less than 5 square meters.
These cage houses and coffin houses were created by owners of small apartments who divided them into smaller sections to put them up for rent. South China Morning Post reported metal cages separate each area with two or three beds stacked together, and the coffin houses are much like closets without windows.
Their space is so tiny that boxes with personal belongings and clothes are on top of the bed, making it impossible for the person to fully stretch out when sleeping. In addition, these apartments have one sink, a bathroom shared with several tenants, and no kitchen.
The terrible conditions in which these citizens live are even a risk to their lives, as the residents share a precarious electrical outlet that can cause fires, and the lack of hygiene in the place can be a source of disease.
The Hong Kong government is aware of these places and, instead of seeking solutions, has legally recognized them as “apartments with sleeping space.”
As of March this year, Hong Kong citizens submitted about 147,500 applications for rental housing, which can take an average waiting time of 6 years due to low supply.
The average price of a house in Hong Kong is more than 20 times the average annual household income, which means that residents of cage houses tend to be senior citizens, workers, and other low-income citizens.
Nine out of 10 people in Hong Kong live in small spaces and pay the highest rent in the world. The average house cost was more than $1.2 million last year. CNN reported that an apartment divided among 10 people costs $232 monthly rent for each of them.
Hong Kong’s new chief executive, John Lee, a representative of the Chinese Communist Party (CCP) who was the former security secretary who led the crackdown on the 2019 freedom and democracy protests, promised short-term solutions to the housing problem, Bloomberg reported.
However, several real estate analysts do not see much of a turnaround possible in the short term. Raymond Cheng, head of China and Hong Kong research at CGS-CIMB Securities, expressed concern about rising home prices next year due to rising interest rates. Cusson Leung, head of Asia real estate research at JPMorgan Chase & Co, predicted that prices would rise by as much as 10% this year on increased demand from buyers coming from mainland China.
But not only would the CCP have to solve the severe problem in Hong Kong, but China is also going through a crisis in its real estate system, according to The Diplomat.
China’s real estate crisis and citizens without access to decent housing
Currently, housing conditions in China are so uneven, and only a part of the population lives in the cities. According to DW, the CCP selects citizens based on their education, ability, or whether they are politically active and generally only allows members of China’s political classes and the economically successful to live in big cities.
Another part of society who are allowed to settle in big cities but only to work and who do not enjoy full rights are traders, servants, waiters, cleaners, and construction workers. The “migrant workers” are Chinese residents from rural communities. Nikkei Asia reported that they have difficulty paying their incredibly high rents.
However, people’s confidence in China’s construction industry has also declined sharply. As a result, many companies have neglected their building projects due to financial difficulties and even used poor quality materials causing several buildings to be demolished. For example, in August 2021, 14 apartment buildings that had been unfinished for seven years were demolished in Kunming, Yunnan province.
Cases of unfinished buildings increased to 4982 in the past two years. There are more than 80 “ghost towns” in Yunnan alone. Many people who applied for these apartments and continue to pay the mortgage have no place to live and must rent, which is even more difficult for them because real estate prices in China are 2.6 times higher than in the U.S.
As a solution, some people have started settling into buildings still under construction. However, after the person signs the contract, the state-owned company states that they had financial difficulties and delays the delivery of the property. As a result, buyers are forced to live in unfinished apartments and are at risk because some buildings must be demolished due to terrible conditions.
For example, in an apartment in a complex in Huangshi, Hubei province, one family placed the armchairs on the concrete floor where there were no windows or doors in the room.
They also use solar-charged lights at night, dump garbage in the mountains and on cold and windy days, sleep in tents inside their rooms, and cook with firewood.
The ABC reported that there are 64.5 million “ghost” apartments in China, defined by numbering the apartments that have not used electricity for six months or more.
Moreover, shoddy materials such as adulterated cement and steel and the illegal use of sea water and sand have led to several collapses of entire buildings. “To ensure the final result, contractors will try every means to cut costs,” an industry entrepreneur in Hebei province told News China, according to Business Human Rights.
In 2020, as a result, a hotel housing people quarantined under observation for coronavirus collapsed in Quanzhou, with an estimated nearly 70 people inside; 48 seriously injured were rescued. The rest died or are missing, Reuters reported.