Cost of Living in Hong Kong

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A market in Hong Kong, photo by Scott Charters

The cost of living in Hong Kong can be high for expats. Listed third in Mercer’s 2014 Cost of Living report, the Pearl of the Orient has an extremely overinflated property market, which makes finding accommodation an expensive endeavour to start with.

Add to that the fact that the majority of produce and commodities have to be imported, and one tends to find that the necessities of life are generally more expensive in Hong Kong than in other cities. Nevertheless, high expat salaries tend to offset these costs, and many find their quality of life is higher than it was back home.

Cost of housing in Hong Kong

Housing is the most expensive thing in the region and, depending on their needs, expats can expect a high percentage of their salary to be spent on a small but perfectly formed apartment. The tiny, older Chinese-style apartments will always be more reasonably priced, but may not afford the space that Western expats often like.

Cost of public transport in Hong Kong

Public transport is cheap, clean and reliable. By contrast, owning and maintaining a car in Hong Kong is very expensive. Most people find that they don’t need one if they live centrally and the cost – and risk of bumping into erratic taxi drivers – is not worth it. Taxis are extremely plentiful and cheap; minimum fare is a modest 22 HKD when the meter starts running and most journeys within central Hong Kong won’t take passengers above 100 HKD.

Cost of education in Hong Kong

Education is free in Hong Kong for state-run schools but the majority of expats who arrive with kids want their children to go to one of the private international schools that teach in English and follow a Western curriculum. These can be incredibly expensive and expats should make sure their salaries or package will cover school costs before signing a permanent contract.

Healthcare is free if expats use the public system, which is very good but heavily oversubscribed. Most organise a private insurance plan through their employer.

Cost of food in Hong Kong

Thanks to its proximity to China, there are many things that can be picked up cheaply in Hong Kong. Household supplies, clothes and other bits and pieces are made just across the border and flown freely into Hong Kong, and are thus very affordable. China also provides a lot of Hong Kong’s fresh food and grocery items, and if expats are happy to go local in terms of produce origin, the weekly shop can be easy on the wallet.

That said, most Westerners do not want to go local, especially with stories of questionable farming practices and food additive scandals hitting the papers regularly. New arrivals can expect to pay double for many food and produce items (especially imported meat), and grocery shopping will quickly add up.

There is no shortage of Western items on international supermarkets shelves: Tim Tams and Vegemite for the Australian market, Graham crackers and Ranch dressing for US visitors and Tiptree jam and Marmite for the Brits. Not to mention, the Japanese supermarkets, Thai food shops and Philippine speciality stores stock their own culinary assets from home.

The cost of eating out and drinking out in Western-style bars and restaurants can be moderate to high in price.

Income tax in Hong Kong

Income tax in Hong Kong is famously very low (between two percent and 17 percent, depending on personal circumstances), and residents have a fairly generous annual tax free allowance before the government takes anything.

The low tax rate is a major selling point noted by expats who choose Hong Kong as their destination; tax rates of 30 to 40 percent in other APAC cities can eat a fair chunk of one's salary.

Potential expatriates should investigate their tax obligations thoroughly before they commit to relocation. Some US citizens, for example, find they end up having to pay tax in both countries, and even if some are not obliged to pay tax at home, they may still need to fill in a tax return if they own property or maintain other assets.

On a final note, tax is all done on a personal tax return basis, and not pay-as-you-earn. When starting work, it is advisable to start saving one's tax somewhere so it is ready and waiting when the tax return is filled in, and the bill from the Hong Kong Inland Revenue in its distinctive green envelope is received.

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Cost of domestic help in Hong Kong

One huge bonus to living in Hong Kong is that domestic help is cheap and reliable. Most families have a full-time helper, usually from the Philippines or Indonesia. They are recognised legally, and work in Hong Kong on a foreign domestic helper’s visa. These full-time ‘domestic helpers’ can be employed for a few thousand Hong Kong dollars a month, and work a six day week, with bed and board being provided by the employer. This means that professional residents can usually afford to have someone at home to help with cooking, cleaning, childcare and other domestic chores while they are in the office working the long hours that most expat jobs in Hong Kong demand.