Chinese language - 'Mortgage slaves' should quit moaning about plight

Opinion / Liang Hongfu

'Mortgage slaves' should quit moaning about plight
By Hong Liang (China Daily)
Updated: 2006-07-11 06:21

Coming from Hong Kong, I find it rather difficult to sympathize with the
moaning and groaning of the mainland's "mortgage slaves."

According to this definition, a big portion of the Hong Kong population
has willingly enslaved itself by placing the mortgage yoke around their
necks. As the economy continues to improve, many more young people are
eagerly enlisting for a life of servitude to the banks.

But this is not the way people, especially the younger generation, look
at property ownership and mortgages in Hong Kong. Their common attitude
is rather more positive and self-reliant.

The average unit price of properties in Hong Kong is much higher than in
many mainland cities, including Beijing, Shanghai and Guangzhou. But the
difference between the average incomes of younger workers in their 20s
and 30s in Hong Kong and major mainland cities is not all that big. For
that reason, the debt burden on an average young family in Hong Kong is
the same, if not heavier, as that suffered by their counterparts in
Shanghai.

But unlike their mainland counterparts, young home-buyers in Hong Kong do
not see themselves as "mortgage slaves." This term is pretty much unheard
of in Hong Kong, although people there have been living with high
property prices and unyielding mortgage debt for many more years than
those on the mainland. For many Hong Kong people, buying an apartment is
an investment in the future, while making mortgage repayments is a way of
saving for old age.

It is not uncommon in Hong Kong for a first time home-buyer, usually a
newly wed couple, to devote half of their combined monthly income to
mortgage repayments. Despite the strain on their family finances, many
young home-buyers are taking it in their stride because they are
confident that property prices will rise and, more importantly, their
incomes may increase.

Rising property prices are usually a reflection of a booming economy,
which will invariably drive up average wages. As the combined income of a
family increases, the portion for mortgage repayments, which is pretty
much fixed, will decrease. As long as the price of their property
continues to increase, many Hong Kong homeowners see mortgage repayments
as a form of savings. When the mortgage is paid off, they expect to have
full ownership of an asset whose market value is greater than the total
sum of the loan plus interest.

Of course, there are unexpected circumstances which can seriously
undermine such confidence. But even the collapse of the property market
following the outbreak of the Asian financial crisis in 1997 did not
drive any significant number of mortgage borrowers to default.

Their perseverance in the most trying times has apparently paid off. The
Hong Kong economy has embarked on a sustained recovery since 2004,
helping to push up property prices and wages. As a relatively more mature
economy, annual growth is expected to remain modest at an average of
about 5 per cent. Property prices are also expected to increase in line
with economic growth, and that's enough to entice many more new buyers.

People with genuine cause for grievance are those who, for whatever
reasons, have been left out of the economic good times. They cannot
afford the 30 per cent down payment for an apartment and therefore do not
qualify for mortgage financing. They are the people who need government
help and subsidies, not the "mortgage slaves" whose major complaint is
the loss of their yuppie lifestyle.

A commentary in a Hong Kong newspaper quoted a young Shanghai couple,
reported to be earning three times the average salary, as saying that
they cannot afford to have babies because half of their combined income
is going to repaying the mortgage loan for their new 100-square-metre
apartment.

The question to ask is why do they need such a large apartment, which is
twice the area of average apartment for a family of four in Hong Kong.
What's more, the remaining half of their combined salary is only slightly
below the income of an average family in Shanghai.

Like this couple in Shanghai, many so-called "mortgage slaves" are the
favoured children of the mainland's economic miracle that has been built,
at least in part, on the hard work and sacrifice of the millions of
migrant workers, who have to put up with low wages, poor living
conditions and, sometimes, discrimination against them and their children
in order to work in the big cities.

Instead of nursing their self-pity, these "mortgage slaves" should,
perhaps, spare some thoughts for those who are much less fortunate than
they are and do something to help their poor and displaced fellow
citizens.

Email: jamesleung@chinadaily.com.cn

(China Daily 07/11/2006 page4)

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