The document discusses Hong Kong's housing crisis for its "sandwich class", defined as lower-middle income households earning $10,000-$24,999 HKD per month who do not qualify for public housing or afford private rentals. Limited affordable housing supply has been exacerbated by rising rents and stagnant incomes. The government has largely ignored the sandwich class's needs. The document recommends subsidizing affordable rental units for 5 years and establishing a homeownership savings scheme to help the sandwich class build equity and improve long-term affordability. This could boost quality of life while balancing feasibility and public opinion.

1. Housing Crisis in Hong Kong
By Tammy Chau, Lisset Gonzalez, Chung Fai Lam, Vanetta Law, Jeffrey Ong, and Tara Pryts
2015 Joint Summer Course
SOS 494/598 & GE3203
Urban Sustainability in Hong Kong

2. Problem Statement
A limited supply of affordable housing is creating a crisis
for Hong Kong’s “sandwich class.” This problem is
further exacerbated by a growing gap between earned
income and increasing rental prices coupled with a lack
of government support.
Housing Crisis for Hong Kong’s Middle Class
Limitations for the Sandwich Class
 Sandwich class:
 Informal term used to refer to
lower-middle-class who are
unable to qualify for
government public housing and
also cannot afford private rental
housing
 Income range $10,000-
$24,999 HKD per month
(Figure 1)
Figure 1

3. High Cost of Living
 The Hong Kong housing market is dominated by private developers.
 Private developers continue to develop luxury housing targeted exclusively for the wealthy.
 Hong Kong has the highest home prices. As of 2013, the ratio of median home prices divided
by median household income has reached 14.9 (Figure 2).
Housing Crisis for Hong Kong’s Middle Class
Limitations for the Sandwich Class
Figure 2

4. Rent Costs & Lack of Supply for Sandwich Class
 While rental needs vary based on different income and age groups, the Hong
Kong government has not adequately addressed the needs of the sandwich class,
which accounts for 31.8% of the city’s population.
 The sandwich class has been largely ignored and provided with no governmental
support, leaving them unable to participate in the housing market and unqualified
for public housing.
Housing Crisis for Hong Kong’s Middle Class
Limitations for the Sandwich Class
Figure 3

5. Housing Crisis for Hong Kong’s Middle Class
Policy Recommendation
Policy Recommendation
Scale the existing “sandwich class” housing scheme to increase the supply of affordable rental
flats for qualified households and provide the opportunity to build equity and improve long-term
affordability with a homeownership savings scheme.
Subsidize Housing
Process: Short Term
Of the public housing units
planned to be built over the
next five years, a portion will
be reallocated to affordable
rental housing for the
sandwich class.
Process: Long Term
Initiate a public/private
partnership to take effect after
five years to ensure a
sufficient supply of both public
and affordable rental units.
Property/Program
Management
Process: Establish a property
management association to
maintain buildings and monitor
the program criteria
Criteria will be based on
income and length of the lease
agreement
Actors: Property Management
Association
Homeownership Savings
Scheme (HOSS)
Process: Rent will be based on a
percentage of disposable income
after cost of living expenses are
deducted
A portion of the rent will be saved
on the renters behalf. The savings
will go into a public fund account
that can be accessed when the
required down payment is accrued
Actors: Hong Kong Housing
Authority

6. Housing Crisis for Hong Kong’s Middle Class
Policy Recommendation
Estimation of HOSS over 10 years
Impact of HOSS

7. Housing Crisis for Hong Kong’s Middle Class
Analysis: Benefits, Trade-Offs, & Feasibility
Quality of Life
• Hong Kong has seen a significant decrease in quality of life since 2007 (Figure 4).
• A stable supply of housing for the sandwich class will improve economic security and
future homeownership opportunities.
Figure 4 Quality of Life Index

8. Housing Crisis for Hong Kong’s Middle Class
Analysis: Benefits, Trade-Offs, & Feasibility
Benefits & Trade-Offs
• Government has anti-intervention mentality
• Public opinion is that attention needs to be
given to overlooked demographics
• Decrease in supply of public housing over a
short-term period
• After the five year period, sandwich class
individuals will be relocated to a newly built
affordable rental units, returning the units
back to public housing
Feasibility
• Fiscal
• Allocating a portion of planned public
housing will ensure fiscal feasibility
• Legality
• Contractual agreements between
tenants and Housing Authority will ensure
legality and fairness
• Political
• The proposed measures hinge on the
Hong Kong government’s assistance to
the targeted sandwich class
• Community Values
• Reflects community values to
alleviate the crisis of the sandwich class
• Technical
• This policy works within existing
infrastructure and will require very little, if
any, additional technology

9. Sources
Census and Statistics Department. Hong Kong: The Facts, (2015, April). PDF file.
Chen, L. (2014, October 8). Beyond The Umbrella Movement: Hong Kong's Struggle With
Inequality In 8 Charts. Forbes. Retrieved from:
http://www.forbes.com/sites/liyanchen/2014/10/08/beyond-the-umbrella-revolution-hong-
kongs-struggle-with-inequality-in-8-charts/
Cost of Living in Hong Kong. Numbeo, 1 June 2015. Web. 17 June 2015.
Hong Kong Housing Authority. Income and Asset Limits, 1 April 2015. Web. 17 June 2015.
Human Development Report. Sustaining Human Progress: Reducing Vulnerabilities and
Building Resilience. (2014).
Information Services Department. Hong Kong: The Facts, Population. (2015, April). PDF file.
Siu, P. (2013, January 11). Hongkongers' median income grew only 10pc in last decade.
South China
Morning Post. Retrieved from: http://www.scmp.com/news/hong-kong/article/1125083/
hongkongers-median-income-grew-only-10-pc-last-decade?page=all