International Housing Affordability Hardly Reflects Hong Kong’s Reality Holistically
International Housing Affordability Hardly Reflects Hong Kong’s Reality Holistically
The source text is in Chinese. This English version is for reference only. In case of any discrepancy between this English version and the Chinese version, the Chinese version shall prevail.
International public policy consultancy Demographia recently published the International Housing Affordability 2025 report, once again ranking Hong Kong as the “least affordable housing market in the world”. With sensationalist headlines and staggering figures, public discourse quickly reached the conclusion that “home ownership is hopeless”. However, upon a closer examination of its methodology and context, it can be observed that such global rankings are more of a cautionary narrative than an accurate reflection of Hong Kong’s actual circumstances.
The original objective of the assessment was to compare housing prices and incomes across regions using a simple indicator. However, when differences in tax regimes, housing benefits, and market structures are factored in, reliance on a single ratio can easily lead to one-sided interpretations.
Lack of Comparison of Tax System Differences
This report applied the “Median Multiple” as its core indicator, whereby the median house price was divided by annual pre-tax household income. Despite its straightforward nature, this approach disregarded the variations in taxation and social security systems across economies, consequently underestimating the burden in higher tax jurisdictions and exaggerating it in lower tax ones, such as Hong Kong. According to the OECD Taxing Wages 2025 report, the average tax burden in 2024 was 34.9%; Canada stood at 32%, Australia at 29.6%, while Germany, France and other European economies were closer to 50%. As compared to these economies, Hong Kong has maintained a 15% limit on its standard personal income tax rate for years, leading to a substantially higher post-tax income.
Comparing Vancouver and Hong Kong, both ranked among the least affordable market, if pretax salaries are HKD 600,000 in both cities, aftertax income in Vancouver drops to HKD 410,000, while in Hong Kong it remains at HKD 510,000. Based on pretax income, the housepricetoincome ratio looks similar in both places, but once aftertax income is considered, Canadian households actually have weaker purchasing power.
In other words, the same "multiplier" can carry different meanings, given that multiple tax systems now coexist. If pre-tax income is the only factor considered, Hong Kong's burden is naturally magnified, making it difficult to accurately reflect the true cash flow pressures faced by households.
A Diverse and Mature Housing Ladder
The crux of housing affordability is whether household cash flow can support home ownership, rather than focusing on abstract ratios. Beyond taxation, social benefits and housing subsidies contribute to an increase in disposable income. Many OECD countries provide cash subsidies or tax credits to ease housing pressure. Hong Kong, however, has a diverse and mature housing ladder. In addition to the private market, there is a public housing system comprising rental public housing and subsidised home ownership, offering support to families.
If affordability is calculated solely based on the private market, it naturally deviates from Hong Kong’s reality. For example, in the 2024 Home Ownership Scheme, the price of flats was set at 30% below market value, averaging around HKD 2.7 million, with monthly mortgage payments at about HKD 11,600. Furthermore, the payment of a number of one-to-two-person flats was set at as low as HKD 7,300 per month. These are not abstract statistics but actual entry thresholds.
In reality, Hong Kong is not a place where “everyone must buy private housing”. According to the Housing Bureau’s Housing in Figures 2024, almost half of all households (46%) are accommodated through the public housing system. If affordability is measured solely by the “private housing price to income” ratio, as in the rankings, it will inevitably lead to an exaggeration of public anxiety and an oversight of the other avenues provided by the mechanism's design.
Living Standards Matter Just as Much
Another major limitation of the ranking is its neglect of actual living conditions in relation to housing prices. It is challenging to accurately assess the housing experience of residents without considering unit size, building age, community facilities and transportation costs. Alternatively stated, the house-price-to-income multiple indicates merely “how much is spent”, rather than “what is obtained”.
In some cities, flats tend to be older and far from the city centre, saddling residents with high commuting expenses. In Hong Kong, while unit sizes are smaller, most are close to railways and community facilities, offering far greater convenience in daily life. If discussion of “affordability” is confined to price-to-income multiples without examining living conditions, the picture will inevitably be distorted.
What truly reflects people’s pressure is not nominal housing prices, but what kind of living quality each mortgage payment affords. Cross‑city comparisons should not remain at the level of single ratios, but must also capture the living environment and costs that lie behind housing prices. Only in this way can the discussion of “housing affordability” return to the tangible reality of household cash flow and lived experience, rather than abstract numbers.
Placed the above 3 factors in Hong Kong’s context, the picture becomes much clearer: if aftertax income is used, the gap between Hong Kong and hightax cities will naturally narrow; if rental public housing and subsidised housing are considered, nearly half of households will be seen to have secure accommodation through the public housing system; if a multidimensional lens is adopted, housing comparisons will not only be price-related but also quality-of-life related.
After all, when families consider home ownership, they do not calculate abstract “multiples” but rather they can afford the down payment, manage the monthly mortgage, and balance commuting and living costs.
That Hong Kong’s housing prices are high has long been an undisputed fact, and simple ratios do have reference value. Nevertheless, whether the city is truly the “least affordable in the world” cannot be determined by a single metric. What policy debate requires is a more comprehensive framework of measurement. Only then can policymakers decide where to focus efforts—whether in adjusting down payments and mortgage ratios, increasing subsidised housing supply, or improving community facilities and living costs. It is only through such multidimensional perspectives that Hong Kong’s housing affordability can be properly understood, and policy tools effectively targeted to steer the market towards a more sustainable and equitable future.
The source text is in Chinese. This English version is for reference only. In case of any discrepancy between this English version and the Chinese version, the Chinese version shall prevail.
International public policy consultancy Demographia recently published the International Housing Affordability 2025 report, once again ranking Hong Kong as the “least affordable housing market in the world”. With sensationalist headlines and staggering figures, public discourse quickly reached the conclusion that “home ownership is hopeless”. However, upon a closer examination of its methodology and context, it can be observed that such global rankings are more of a cautionary narrative than an accurate reflection of Hong Kong’s actual circumstances.
The original objective of the assessment was to compare housing prices and incomes across regions using a simple indicator. However, when differences in tax regimes, housing benefits, and market structures are factored in, reliance on a single ratio can easily lead to one-sided interpretations.
Lack of Comparison of Tax System Differences
This report applied the “Median Multiple” as its core indicator, whereby the median house price was divided by annual pre-tax household income. Despite its straightforward nature, this approach disregarded the variations in taxation and social security systems across economies, consequently underestimating the burden in higher tax jurisdictions and exaggerating it in lower tax ones, such as Hong Kong. According to the OECD Taxing Wages 2025 report, the average tax burden in 2024 was 34.9%; Canada stood at 32%, Australia at 29.6%, while Germany, France and other European economies were closer to 50%. As compared to these economies, Hong Kong has maintained a 15% limit on its standard personal income tax rate for years, leading to a substantially higher post-tax income.
Comparing Vancouver and Hong Kong, both ranked among the least affordable market, if pretax salaries are HKD 600,000 in both cities, aftertax income in Vancouver drops to HKD 410,000, while in Hong Kong it remains at HKD 510,000. Based on pretax income, the housepricetoincome ratio looks similar in both places, but once aftertax income is considered, Canadian households actually have weaker purchasing power.
In other words, the same "multiplier" can carry different meanings, given that multiple tax systems now coexist. If pre-tax income is the only factor considered, Hong Kong's burden is naturally magnified, making it difficult to accurately reflect the true cash flow pressures faced by households.
A Diverse and Mature Housing Ladder
The crux of housing affordability is whether household cash flow can support home ownership, rather than focusing on abstract ratios. Beyond taxation, social benefits and housing subsidies contribute to an increase in disposable income. Many OECD countries provide cash subsidies or tax credits to ease housing pressure. Hong Kong, however, has a diverse and mature housing ladder. In addition to the private market, there is a public housing system comprising rental public housing and subsidised home ownership, offering support to families.
If affordability is calculated solely based on the private market, it naturally deviates from Hong Kong’s reality. For example, in the 2024 Home Ownership Scheme, the price of flats was set at 30% below market value, averaging around HKD 2.7 million, with monthly mortgage payments at about HKD 11,600. Furthermore, the payment of a number of one-to-two-person flats was set at as low as HKD 7,300 per month. These are not abstract statistics but actual entry thresholds.
In reality, Hong Kong is not a place where “everyone must buy private housing”. According to the Housing Bureau’s Housing in Figures 2024, almost half of all households (46%) are accommodated through the public housing system. If affordability is measured solely by the “private housing price to income” ratio, as in the rankings, it will inevitably lead to an exaggeration of public anxiety and an oversight of the other avenues provided by the mechanism's design.
Living Standards Matter Just as Much
Another major limitation of the ranking is its neglect of actual living conditions in relation to housing prices. It is challenging to accurately assess the housing experience of residents without considering unit size, building age, community facilities and transportation costs. Alternatively stated, the house-price-to-income multiple indicates merely “how much is spent”, rather than “what is obtained”.
In some cities, flats tend to be older and far from the city centre, saddling residents with high commuting expenses. In Hong Kong, while unit sizes are smaller, most are close to railways and community facilities, offering far greater convenience in daily life. If discussion of “affordability” is confined to price-to-income multiples without examining living conditions, the picture will inevitably be distorted.
What truly reflects people’s pressure is not nominal housing prices, but what kind of living quality each mortgage payment affords. Cross‑city comparisons should not remain at the level of single ratios, but must also capture the living environment and costs that lie behind housing prices. Only in this way can the discussion of “housing affordability” return to the tangible reality of household cash flow and lived experience, rather than abstract numbers.
Placed the above 3 factors in Hong Kong’s context, the picture becomes much clearer: if aftertax income is used, the gap between Hong Kong and hightax cities will naturally narrow; if rental public housing and subsidised housing are considered, nearly half of households will be seen to have secure accommodation through the public housing system; if a multidimensional lens is adopted, housing comparisons will not only be price-related but also quality-of-life related.
After all, when families consider home ownership, they do not calculate abstract “multiples” but rather they can afford the down payment, manage the monthly mortgage, and balance commuting and living costs.
That Hong Kong’s housing prices are high has long been an undisputed fact, and simple ratios do have reference value. Nevertheless, whether the city is truly the “least affordable in the world” cannot be determined by a single metric. What policy debate requires is a more comprehensive framework of measurement. Only then can policymakers decide where to focus efforts—whether in adjusting down payments and mortgage ratios, increasing subsidised housing supply, or improving community facilities and living costs. It is only through such multidimensional perspectives that Hong Kong’s housing affordability can be properly understood, and policy tools effectively targeted to steer the market towards a more sustainable and equitable future.
