High Housing Rent may explain High Food Expenditure of Hong Kong

Hong Kong is notorious for its unaffordable housing price, and it has been the most unaffordable city in the world for the past consecutive 9 years. For details, please refer to my previous article (Yiu, 2019). However, most studies focused on housing price only (such as the one done by Demographia), and there are very few global comparisons on housing rent. Yet, it is commonly recognized that housing price is strongly influenced by monetary and mortgage policies, and thus its affordability can be severely interfered by money supply and mortgage rate, etc. Housing rent seems to be a better metric for comparing affordability.

Interestingly, a recent study published by Deutsche Bank Research (2019) found that housing rent of Hong Kong is equally unaffordable, and its rent is also the highest in the world. Unlike Demographia, Deutsche Bank Research does not consider median housing price to median household income ratio, but comparing the rents of a typical two-bedroom apartment in 55 cities, and found that Hong Kong’s housing rent and personal income ratio are much higher than international standards, making it the highest housing rent in the study among the 55 cities.

It can be seen from Figure 1 that housing rent in Hong Kong is totally disproportionate to the global rent-to-income ratio line. For example, if the salaries after taxes and the rents of housing in San Francisco, Zurich, New York and HK are compared, the results show that people in San Francisco, Zurich and New York are earning 2.7 times, 2.5 times and 1.9 times that of the salary of people in Hong Kong, but their housing rents are only 99%, 69% and 79% of Hong Kong’s respectively. It reflects that the high living cost in Hong Kong and the disposal income after paying rent in Hong Kong would be much less than people living in the other 3 cities. The study compares a typical 2-bedroom apartment rented by two-equal-income-earning-persons household in all the cities, then the disposable expenses after deducting rents in San Francisco, Zurich and New York are US$9,421, US$9,254 and US$6,315, respectively, but just US$1,113 in Hong Kong.

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Figure 1 Scatterplot of Income and Rent. Source: Deutsche Bank Research (2019)

The high rent situation has been seriously affecting the quality of life and imposing chronic stress. It explains why micro-flats and nano-flats are very common in Hong Kong. The small living space and high density of living result in the fact that many units do not even have kitchens or need to share a kitchen. Thus, Hong Kong people are more likely to go out to eat.

However, the high land price policy also affects the rent of shops and restaurants. In general, rent costs often account for more than 30% of the total operating costs of a restaurant in Hong Kong. Thus higher rent implies higher meal price. The same study found that the dining-out price in Hong Kong ranks the third and sixth in the international rankings, for a cheap dinner (at a neighborhood pub) or a high-priced dinner (full course set at an Italian restaurant).

Figure 2 shows the price of a two-person dinner at a neighborhood bar versus the 2-person household’s disposable income. The dinner price in Hong Kong is even higher than that in New York and San Francisco. Furthermore, since the income in Hong Kong is much lower, it is unaffordable for a typical 2-person household to dine out even at a neighborhood pub, as they would spend all their disposable income just by dining out 18 times per month.

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Figure 2 Scatterplot of Dine-out Cost at a Pub and Income. Source: Deutsche Bank Research (2019)

Similarly, it is severely unaffordable for a typical household in Hong Kong to dine-out Italian cuisines, even though its price is in line with the other 3 cities. (Figure 3)

Figure 3 Scatterplot of Dine-out Cost at an Italian Restaurant and their Income. Source: Deutsche Bank Research (2019)

Thus, many households in Hong Kong are economically forced to take junk foods at fast food shops, which have been found to be addictive. Many Hong Kong people tend to eat more because of addiction and chronic stress. These factors may explain why Hong Kong people consume more food or more expensive than many other cities in the world. This hypothesis seems to be able to explain the results more plausibly, but it is still required to be verified.

Lastly, chronic stress can also be due to the high cost of living and high tension environment of Hong Kong. For example, the cost of living in Hong Kong is among the highest in the world. From Deutsche Bank Research (2019) study, the cost of living index of Hong Kong ranks 41st out of the 56 cities, while another latest study on global cost of living (EIU, 2019) the cost of living in Hong Kong is the highest in the world, got the same rank as Singapore and Paris. It reflects the stressful life in Hong Kong, and it is reported that working hours in Hong Kong is also the longest in the world, the working environment and learning environment are in a high level of competition. These may also explain the higher consumption rate of food in Hong Kong.


Demographia (2019) Housing Affordability Index 2018, Jan, Demographia.

Deutsche Bank Research (2019) Mapping the World’s Prices 2019, Thematic Research, May 19.

EIU (2019) Worldwide Cost of Living 2019: Which global cities have the highest cost of living? The Economist — Intelligent Unit.

Our World in Data (2019) Food Prices, https://ourworldindata.org/food-prices.

Seale, James, Regmi, Anita Jr. and Bernstein, Jason (2003) International Evidence Consumption Patterns, Technical Bulletin 1904, USDA, Oct. “These conclusions are based on a two-stage, cross-country demand system fit to the 1996 International Comparison Project (ICP) data for nine broad categories and eight food sub-categories of goods across 114 countries. … The food sub-groups include bread and cereals, meat, fish, dairy products, oils and fats, fruit and vegetables, beverages and tobacco, and other food products.” (Abstract) “It should be noted that the food grouping includes food prepared and consumed at home plus beverage and tobacco. It does not include food consumed away from home. (p.12)”

Yiu, C.Y. (2019) Meat Consumption Growth in Hong Kong is Alarming, Medium May 19, https://medium.com/@edwardyiu/meat-consumption-growth-in-hong-kong-is-alarming-872e46bf40ca

ecyY is the Founder of Real Estate Development and Building Research & Information Centre REDBRIC

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