HONG KONG: The reality of the Hong Kong property market is that gradually the dream of many young people of owning an urban home is turning into a rude awakening. Today's young couples are confronted with the dilemma of whether they should buy a house in the New Territories or not own a home at all.

The sharp rise in property prices throughout this year has done little to reinvigorate the fading dream. The prices for modest homes have shot up 30 per cent since the beginning of this year. It hasn't helped that the real estate climate has been pressed into the Torrid Zone by a luxury housing market in which buyers appear frantic to buy bragging rights as purchasers of the most expensive apartment on the planet. All the reassurances in the world that the luxury market and the real world market are separate and disconnected do little to relieve middle class, first-time home buyers.?

Some experts challenge these popular conceptions, as they firmly assert that things really are not as bad as they may seem. Young couples may find reason for home in the words of Wong Leung-sing, associate director of the research department in a real estate agency, who foresees a certain, stable pattern opening new avenues for the purchase of private properties.

"People will start to buy a small house in the distant New Territories areas. Several years later they will move to a house in Kowloon. Later they will move to one on Hong Kong Island," he said with an air of certainty. "Most of them can not own an ideal house in one step. People normally buy two houses in a lifetime."

The road may have gotten a little longer but young middle class people need not to be too pessimistic, Wong said.

He holds an optimistic view for the prospects of the young middle class. "Along with the gradual economic recovery, their incomes will increase, and then they won't have so many complaints," he said. Additionally, in the long term, as older members of Honk Kong's rapidly aging population pass on, the urgency of demand on the property market will gradually abate, he said.

Some experts continue to urge the SAR government to jack up the land supply to alleviate what they consider an imbalance of supply and demand.

"The tight land supply is the core issue. The way to solve the problem is to change the land supply mechanism," said Bernard Lim, professor at the School of Architecture at the Chinese University. "There is still a lot of land that could be developed in the urban area." He observes Hong Kong is not over-developed like some mainland cities.

Chung Kim-wah, who studies housing and urban studies at the Polytechnic University, is also concerned about the lack of availability of property for new housing. The supply of previously developed properties is also limited. He calls on the government to draw up a long term plan for residential deployment.

That appeal also caught the attention of the government. "Based on data available as at June 2009, we estimate there will be about 56,000 first-hand private residential flats available in the market in the coming few years. Also, there are flats available in the secondary market," a spokesman for the Transport and Housing Bureau replied.

Urban planning experts like Bernard Lim think the development of urban housing must continue to follow a similar pattern to the way Hong Kong developed in the past. He says the solution is further development around mass transit railway stations. "We have always suggested developing more residential areas along the railway line by expanding the railway network," he said.

The Island West Line now under construction will be completed in 2014. In the future the Island South Line will facilitate further development in western and southern areas of the Island. The future Shatin to Central Link (SCL) will save a lot of time for people living in the northeast New Territories who commute to Central. He predicts that in the future northeast New Territories areas, like Sha Tin and Ma On Shan, will become prime real estate areas highly favored by home buyers. The SCL also will create re-development opportunities in old areas like To Kwa Wan and Kowloon City.

However, Wong Leung-sing cautioned that even in the face of these opportunities, the rush for profit among developers could see middle-class buyers shoved aside. "There might be new expensive or luxury flats, instead of affordable houses (along railway lines)," he said.

Hong Kong's planning also features a landscape more favorable to housing in the urban area.

The government has promised it would "give priority to utilizing the available development potential of the Metro Area" in the future in its 2030 planning vision and strategy. The Metro Area will remain focused on providing housing for an urban-lifestyle living, mainly by utilizing infill sites for redevelopment. West Kowloon and Kai Tak are singled out for infill/redevelopment schemes.

As to the large expanses of available lands on Hong Kong's outlying islands, no plans ever have been drawn up foreseeing the day when the islands might become dotted with apartment high rises. Francis Wong, who studies affordable housing at the Polytechnic University, believes the demand for housing on outlying islands would be limited. The supporting facilities in the district, especially transportation, simply would make the islands unattractive for most buyers.

Mega buildings such as those being devised elsewhere by architects also do not fit the planning picture in Hong Kong, said Wong Leung-sing. Environmental concerns that have emerged in recent years put a stop to any consideration of that alternative, he added.

Even though the cost of a middle class home has risen 30 percent since the beginning of the year, things still are not as bad as they were in 1997. Government data show that the prices of small and medium-sized flats, saleable area below 750 square feet, as of August 2009, were still about 27 to 30 percent lower than the level of 1997, as reflected by the residential price index. Besides, the mortgage-to-income ratio was 29 percent in the second quarter of 2009, which is a whole lot lower than the 74 percent it was in 1997.

Editor's note: This is the second part of a story of fading and failing dreams of home ownership, of a crisis in the making that is challenging and frustrating home-yearning middle class couples.

(HK Edition 10/23/2009 page1)