The Wealth of Hong Kong: Beyond Property Values and Liquid Assets

For many, the idea of wealth in Hong Kong is closely associated with skyrocketing property values. But a deeper look reveals a more complex picture. Wealth, as defined by disposable assets, includes more than just property values. This article uncovers the nuances of wealth assessment in Hong Kong, focusing on the differences between property ownership and liquid assets.

Understanding Wealth: More Than Just Property Values

Technically, wealth is determined by disposable assets, which do not include the value of the property one is living in. Therefore, individuals residing in expensive properties do not necessarily hold substantial wealth. There are two primary reasons for this:

Bought into the market early: Those who bought property when market prices were lower than current levels would indeed possess significant wealth if they were to sell. However, selling such property would leave them without a place to live. High mortgage burden: Others might have bought property using borrowed money from relatives for the deposit, leading to significant mortgage debt. While they may appear wealthy based on property values, they are actually struggling to keep up with their mortgage payments.

Therefore, while owning property can certainly contribute to an individual's perceived wealth, it does not guarantee actual wealth unless it can be converted into liquid assets.

The Reality of Property Ownership in Hong Kong

Most property owners in Hong Kong have either bought into the market early or are heavily in debt. Here's a closer look at the situation:

Early-bird buyers: These individuals took advantage of lower prices and are currently sitting on significant gains, though they are not rich in the conventional sense. Huge mortgage obligations: Others owe substantial sums to the bank, representing a significant portion of their total assets. Homelessness if they sold: Selling property to liquidate assets would eliminate their primary place of residence, precipitating a drastic lifestyle change.

Public Housing in Hong Kong

While property ownership plays a significant role in understanding wealth, it is crucial to recognize the reality for a large segment of the population. According to 60% of Hong Kong's population lives in public housing because they cannot afford to buy property in the private sector. This group:

Cannot access the traditional path to wealth: Limited financial resources and high property prices in the private market make it almost impossible for many to accumulate disposable assets. Face ongoing challenges: Those living in public housing face significant financial and social challenges, which impact their overall well-being and opportunities.

Conclusion

While property values in Hong Kong have risen significantly, they do not fully define an individual's wealth. Wealth is better understood through disposable assets, reflecting financial flexibility and liquidity. In Hong Kong, the reality is multifaceted, with a stark contrast between property wealth and true disposable assets. Recognizing these nuances is crucial for a comprehensive understanding of wealth in the city.