Since the real estate market fell from its peak in 2022, property prices have fallen by about 30%. The decline in property prices is more harmful to those who are about to retire. Especially for the impoverished middle class, if they need to sell their properties for cash after retirement, the funds which can be received will be significantly reduced.
Before the property price fell three years ago, a small unit with a market value of more than HK$ 7 million is now worth HK$5 million or more. If this impoverished middle class has other assets, it is really difficult for them to retire safely. For these retirees, the only way for them to live consistently in the same apartment is to take out a reverse mortgage. Since an application for a reverse mortgage is approved, the applicant can receive about HK$12,000 per month. Since the payment is fixed, the purchasing power of this fund will be decreased time by time as inflation is incremental.
Obviously, this monthly collection is insufficient for the Impoverished middle class to live decently with no other income. If they choose to rent out their units after retirement and then use the collective rents to live in Greater Bay Area. They may be able to have a happy life. However, if they encounter nonpaying tenants after renting out the unit, they will be miserable because the rent cannot be collected properly.
If they choose to sell the property to gain back HK$ 5 to 6 million, they will receive 3.3% return by arranging a fixed deposit in US dollars. As a result, they may receive HK$14,000 to 15,000 per month. With this income, life in the Greater Bay Area is not bad.
However, if interest rates fall, monthly income will decrease. No matter how the impoverished middle-class retirees to manage their premises, their living standards will slowly decline with no other passive income.
Therefore, the impoverished lower middle class has to keep working to maintain active income. The actual date of retirement may be deferred beyond 75 years old. For those grassroots citizens, they can apply for public housing with a monthly rent of about HK$1,000 per month. After the age of sixty-five, they can request a monthly old age subsidy of more than HK$4,000 per month. Together with other subsidies, their life may be better than that of the impoverished middle class.
