Cost of Living in Hong Kong

The cost of living in Hong Kong for an expat can be somewhat on the high side.  Listed 9th in Mercer’s 2011 Cost of Living Report, Hong Kong 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 you tend to find that the necessities of life are generally more expensive in Hong Kong than in other cities.

All things considered though, the majority of expats are still financially better off living in Hong Kong than back at home.  After all, they wouldn’t really be here otherwise.  The cost of living versus the quality of life is an equation that comes out with a positive result when applied to Hong Kong.  
 

Housing is the most expensive thing in Hong Kong, and depending on your needs, you can expect a high percentage of your 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 you the space you'd like.

Public transport is cheap, clean, reliable and dreamlike, as compared to other city’s commuter solutions.  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.  Talking of taxis, these are extremely plentiful and cheerily cheap; minimum fare is a modest 20 HKD when the meter starts running, but most journeys within central Hong Kong won’t take you above 50 HKD.  

Education is free in Hong Kong for state-run schools, but the majority of expats who come here with kids want their children to go to one of the private international schools that teach in English and adopt a more westernised approach to lessons and curriculum. These can be incredibly expensive, and expats should be well aware of annual tuition before signing a permanent job contract.

Healthcare, again, can be free if you use the public system, which is very good, but which is heavily oversubscribed due to a large number of people from mainland China using the Hong Kong system, as well.  Most people have a private insurance plan from 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 you are happy to go local in terms of produce origin, the weekly shop can be easy on the wallet.

However, therein lays the problem for the discerning expat living in Hong Kong.  Most westerners do not want to go local, especially with stories of questionable farming practices and exploding Chinese watermelons hitting the papers this year.  

For this reason, grocery shopping will add up, and the cost of eating out and drinking out in western-style bars and restaurants can be moderate to high.

The majority of expats want to get their hands on familiar products in the international supermarkets, and this is where you can start expecting to pay top dollar for things.  There is no shortage of Western items on supermarkets shelves.  

Tim Tams and Vegemite for the Australian market, Graham crackers and Ranch dressing for the 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.  But, as mentioned above, all these items are imported and this adds considerably to the end price shouldered by expat consumers.

You can expect to pay double for a lot of food and produce items (especially imported meat), so if you are the kind of person that likes to have your familiar home comforts, then expect your grocery bills to be higher than they are at home.

Income tax in Hong Kong

Income tax in Hong Kong is famously very low (between 2 percent and 17 percent, depending on your personal circumstances), and you 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 your salary.

Do investigate your tax obligations thoroughly before you commit to relocation.  Some US citizens, for example, find they end up having to pay tax in both countries, and even if you are not obliged to pay tax at home, you may still need to fill in a tax return if you 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 you start work, it is advisable to start saving your tax somewhere so it is ready and waiting when you fill in your tax return, and get the bill from the Hong Kong Inland Revenue in its distinctive green envelope.   

►Calculate your tax obligations

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. 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.  

They are recognised legally, and work in Hong Kong on a specific type of ‘helper’s’ visa.  This means that you can usually afford to have someone at home to help with cooking, cleaning, childcare and other domestic chores while you are in the office working the long hours that most expat jobs in Hong Kong demand.

Salary packages and wages in Hong Kong

Generally speaking, wages in Hong Kong are higher for expats than they would be for someone who holds the same role in another country.  That said, hours are long and positions demanding, but expat packages are still pretty generous when you compare them to local packages and consider the current global economic climate.  

A good expat package for a senior role should include some or all of the following:

• Housing allowance,
• School tuition for any children you will be bringing with you, and help to get your kids into the school of your choice,
• Health insurance,
• Flights back to your home country every year.  

Not all packages will include everything, and obviously the more junior the role, the fewer the incentives you will be offered to lure you to Hong Kong.  However, all of the above are acceptable to ask for if you are negotiating with a prospective employer.  
Keep in mind that accommodation will be your largest expense, and even if you don’t get an allowance, at the very least, some employers will help you to ensure that your rent is tax deductible (another good thing to negotiate into your employment contract).