‘Quantity illusion’: Think tank says Hong Kong homes have shrunk in size by a quarter over 3 decades

A think tank has found that Hong Kong homes have shrunk in size by a quarter over three decades, even as the government claims housing supply has gone up. It called on authorities to adopt floor area as a supply metric.

Residential estates in Hong Kong. File photo: Kyle Lam/HKFP.

The report by the Hong Kong Future Economy Institute, released on Tuesday, found that the average floor area of newly completed units was about three quarters the size of a flat built in 1995.

The research, titled “Smaller and Smaller,” warned of a “quantity illusion” arising from evaluating housing supply purely by the number of units built. It said that the average floor area has fallen from 50.4 square metres to 37.2, amounting to a 26 per cent decrease over about three decades.

Graphs showing estimated average unit size, overall and by category. Photo: Screenshot via Hong Kong Future Economy Institute.

“If the number of new units rises while average size falls and the share of family-sized units contracts, the real gains represented by the recovery in supply need to be assessed more carefully,” the researchers said.

‘Quantity illusion’

While total housing supply, covering public rental housing, subsidised sale homes, and private developments, increased in recent years compared to the period between 2005 and 2016, total floor area did not increase proportionately.

A total of 47,347 units were completed in 2024, approaching the 1995 figure of 52,048.

But the total floor area delivered in 2024 was around 1.8 million square metres, equivalent to two-thirds of the 2.6 million square metres recorded in 1995 and just 39 per cent of the 2000 peak of 4.6 million square metres.

Graphs comparing housing completions and total floor area of homes. Photo: Screenshot via Hong Kong Future Economy Institute.

To combat the city’s housing crunch, the Hong Kong government has been working towards a long-term housing goal of providing 440,000 new housing units from 2025 to 2035.

According to the study, 14,126 flats were completed under the city’s Home Ownership Scheme in 2024, about 60 per cent of levels in the year 2000, when housing completions reached a peak.

However, the total floor area of the 2024 flats amounted to less than a third of the area seen in 2000.

“The unit count has nearly recovered; the living space has not,” the report read.

Public rental flats have also shifted from being family-sized flats to “micro units,” the report said, declining from an average of 40.2 square metres to 26.7 square metres from 1995 to 2024 – a one-third reduction.

“Nano-flats,” units with a saleable area under 18.6 square metres, have also become far more commonplace on the private market, with large private homes only making up a “marginal share” of new supply.

“Because units are shrinking across all housing types, raw unit counts systematically overstate the actual housing services being delivered. This is the quantity illusion,” the paper read.

“The quantity illusion is not merely a measurement problem. It shapes policy. When policymakers see rising unit counts and conclude that supply is recovering, they are less likely to pursue the aggressive interventions that the actual situation demands,” it added.

The researchers called on the government to adopt total floor area as a supply metric alongside completed units. “Had this been standard practice, the shrinkage documented in this paper would have been visible – and perhaps preventable – years ago.”