LegCo Secretariat releases Research Brief on "Financial challenges faced by households in Hong Kong"
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The Legislative Council Secretariat (the Secretariat) today (November 21) released a Research Brief on "Financial challenges faced by households in Hong Kong".
Local households usually strive to save some of their income as a buffer against contingencies like unemployment or sickness, as well as a long-term family planning. From macroeconomic perspective, household saving can mitigate reliance on social welfare payments and alleviate fiscal burden of the government on the one hand, and act as social investment funds driving economic growth on the other.
However, in face of slowing economic growth, slackening social mobility, continued inflation and escalating property cost in Hong Kong, many lower to middle income families may not be able to do so. They may need to rely on past savings, loans or government assistance to finance their monthly household expenditure. Netting out the monthly financial support to parents or retired family members and additional education expense for children engaging in full-time study, monthly saving of many lower to middle income households could be much reduced to the break-even level or even to the negative territory. Only those better-off families could maintain positive saving.
Meanwhile, the average monthly spending of a retired couple household ranged from HK$6,600 to HK$38,300 in 2015. Although the drawdown of Mandatory Provident Fund assets and family contribution can render partial support, elderly persons still need to accumulate substantial savings before retirement if they wish to live in a self-reliant manner. This is, however, a challenging task for grassroots families as they have little saving left, and they may turn to the government for assistance when they live beyond the means.
In parallel with tighter household finance, more families resort to borrowing to tide over financial difficulties. On average, each household in Hong Kong bore a debt of HK$646,100 at the end of 2015, almost twice the respective debt level of HK$349,100 in 2005. Analysed by type, mortgage loans are the largest item in household debt, taking up 70 per cent of the total value. As to non-mortgage debt, its average value was HK$192,500 per household at the end of 2015, more than double the level of HK$72,900 at the end of 2005. In anticipation of an imminent rise in US interest rate which may trigger a correction in local property market and an enlarged burden of mortgage repayment, the uptrend in household debt poses a potential risk to the wider economy.
This is the first issue of the Research Brief for 2016-2017 prepared by the Secretariat's Research Office of the Information Services Division with a view to enhancing information support for Members. It is a concise summary aiming at explaining a subject matter which may be of interest to Members and the general public.
The Research Brief is now available on the Legislative Council Website at www.legco.gov.hk/research-publications/english/1617rb01-financial-challenges-faced-by-households-in-hong-kong-20161121-e.pdf.
Ends/Monday, November 21, 2016
Issued at HKT 16:15
Issued at HKT 16:15
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