HK population shifts

Some interesting stats about demographic changes in Hong Kong. 

On the relatively lighter side, Bloomberg notes that residential rents in mid-range middle-class areas have risen strongly in the first 10 months of this year (relatively cheap Tung Chung up 16.4%, North Point 14.1%, West Kowloon 12.3%, Olympic 12.3%), while rents in swish up-market neighbourhoods have fallen (Clear Water Bay down 6.8%, Deep Water Bay 5.1%, The Peak 10.6%, Shouson Hill 12.2%).

In short, highly paid executives – many presumably expats – have been leaving Hong Kong (plus maybe some are having their rent allowances cut), while lower-earning Mainlanders have been coming in. Landlords are perhaps putting a brave face on it… 

Vacancy on the Peak is rising partly because Chinese tenants have snubbed the area for its higher levels of humidity [real-estate agent Alan Li] said.

It is sweaty up there, but they can afford air-conditioning and servants to scrape the fungus off the walls. The price of housing might be a factor too. 

The underlying story is one of migratory mismatch. Senior international corporate types have been declining in number (as have certain other demographics – see below), while the Hong Kong government is replacing them, via visas-for-talent schemes, with less skilled Mainlanders (some of whom are reportedly finding work selling insurance). Hence closures of many fancy restaurants and other businesses serving high-end clientele. 

For really startling figures, see Joel Chan’s post with a chart showing the change in age groups in Hong Kong since mid-2017. The number of 70-79-year-olds is up 63% and 60-69s up 31%. The number of 30-39s is down 6.3%, 0-9s down 21.3% and 20-29s down an incredible 24.7%. 

The big rise in elderly cohorts is presumably due to so many people in their 50s and 60s moving into the 60s and 70s brackets. The drop in those in their 20s and 30s must be largely due to emigration (plus some of the 30s lot moving into the 40s segment, which is up 1.8%). This would be even greater without Mainland arrivals, many of whom must be in the 20s and 30s groups. The fall in 0-9s would be a combination of emigration and a big fall in the birth rate during the last few years. A 2.4% rise in the 10-19 segment would (I guess) reflect the higher birth rates earlier this century. Plus, in both cases, there must be some 0-19s coming in with Mainland adults.

The drop in 20-29s is amazing – comparable to the loss of men in that age group in Germany or France due to World War 1. How big is the decline if you zero in on the college-educated ones? How does Hong Kong pay for the health and welfare of so many elders with far fewer people of working age paying tax? (That’s another thing: more than a few young Mainlanders planning to stay in Hong Kong also hope to bring their aging parents over – to enjoy the free health care.)

RIP Bill Overholt. At Nomura just after the handover. he wrote a superb paper (which I still have somewhere) recommending in detail that Hong Kong begin an estimated 20-year process of ‘unwinding’ its land system – which was of course ignored. Also a really nice guy.