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Honkongers snapped up 10,400-11,600 residential units on the mainland in the first six months of this year, 6 per cent more than the same period last year, with 50 per cent of the deals being struck in neighbouring Shenzhen, a major real estate agent said.
It's estimated that Hongkongers will buy 23,500-25,300 units on the mainland by the end of the year. This is because in the second phase Close Economic Partnership Arrangement (CEPA II) more people from Hong Kong will move to the mainland either to work or to start their business.
Contrast this with the number of residential units under construction in Hong Kong last year, which was only 14,000, less than half of 35,000 in 1998, a new record low since 1997. The number of completed units, too, was a record low of 26,000.
It's estimated 33,000 units would be on sale -- an alarming development considering the comparative 80 per cent growth of the mainland property market for Hongkongers.
Don't be surprised if in the next few years the mainland market outgrows the local one.
According to a survey conducted by the same property agent, 26 per cent of local residents intend to buy property on the mainland, a persistent increasing trend from 19 per cent in 2001. In contrast, government figures show only 73,000 units would be available in the market in the foreseeable future. What's worse is that the land reserve of major developers is running dry.
The stated aim of the government is to remain restrictive in the supply of land to get more money from the biddings and prop up property price. But these two factors have been encouraging more Hongkongers to buy property on the mainland, where apart from the seemingly endless supply, the prices are a lot more attractive.
A recent advertisement says it all. For the price of a cubicle in Hong Kong, one could buy a luxury flat in Shenzhen or a house in Zhongshan. In Hong Kong, a flat is becoming more and more unaffordable for the common man. The faster the property prices rise in Hong Kong, the faster will people move across the border.
At the moment, most Hongkongers buy mainland property to spend their holidays and/or retire to after superannuation. But with an ageing population, and an expected relaxation in welfare payment stipulations enabling the recipients to be absent from Hong Kong for long periods of time, more old people will choose to live on the mainland where they could be close to their relatives and better off because of the much lower cost of living.
Because of the abundance of economic opportunities on the mainland under CEPA and more convenient transportation, an increasing number of young Hong Kong couples are making their home in Shenzhen. A proof of that is the increasing number of small kids crossing the borders daily to attend schools in Hong Kong.
In total contrast to the crossover to the other side, the number of mainlanders migrating to Hong Kong has been falling for some time. The result: the underuse of the annual quota of 55,000. Worsening matters is the fact that many mainland immigrants come over to Hong Kong just to claim their right of abode. Some return home immediately after getting their ID cards. A Hong Kong Permanent Resident status and a SAR passport enables them to come any time they feel like, and travel abroad freely without a visa in most cases. With fierce competition and a high unemployment rate, they know they'd be better off on the mainland.
Our fertility rate has been the lowest in the world since the early 1990s; it's now 0.91 children born per woman. If we subtract the death rate from that, it'd show our population grows by less than 10,000 a year.
Putting all the above factors together -- a rising outflow, falling inflow, a slow internal growth rate -- we are looking at the possibility of a declining population down the road, maybe in the next decade, if not earlier.
The education sector would be the first one to be hit; in fact, the blow is already being felt. The wave of school closures has passed the kindergartens and has now struck the primary level ones. It shouldn't surprise anyone if secondary schools go the same way. The process is painful, but with an expanding education budget even at the height of deflation and a general budget cut, most teachers still can hold on to their jobs.
The building and construction sector, too, has been seriously hit. Many blame it on the reduction of government infrastructure projects, which may recover with the economy and when the budget deficit is wiped off. But judging from the above figures, the loss of jobs in the residential construction section is not only sizable, but also unrecoverable. That's too bad a news for the illiterate or lowly-literate men over 40s and 50s. The big bulge in the unemployment rate among this age group will be here to stay.
With more people preferring to spend their holidays, long ones too in many cases, in their mainland flats even normal Saturdays and Sundays are extra quiet. We no longer have holiday spending binges. But many retail and restaurant operators still seem happy because such losses are more than compensated by the large influx of tourists from the mainland. This is a fluid situation because the balance could tip the other way any time for a variety of reasons.
The above are just samples, with the worst yet to come, that is, when we actually face the problem of a declining population. The phenomenon is called inner-city decay and it took place in the 1970s and 1980s in all the major cities across the US when the middle-class left the cities for a quieter suburban life. The city centres looked run down, poor and became crime-ridden. If our government doesn't pay attention to this ominous development and take early action to prevent it from happening, we'll have only ourselves to blame.
(China Daily HK Edition August 1, 2005)
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