Social discontent with stratospheric housing prices is playing a major part in the unrest, Andy Xie, an independent economist, told CNBC’s “Squawk Box”on Wednesday.
“Hong Kong has been a pressure cooker for a long time,” he said.
According to the Centa-City Leading Index, a widely used indicator of the city’s residential price trends, property prices have appreciated over 300% since 2003 when they tanked due to a disease epidemic.
But wages have largely stagnated in the same period, so “it’s very difficult to see how young people can feel hope. They know they’ll never be able to afford a place, so they cannot start a family. How can they get ahead in life? Desperation, and really a deep sense of unhappiness, is driving this unrest,” said Xie.
Last year, global chairty network Oxfam flagged a “particularly severe” wealth disparity in Hong Kong, which it said was the highest among all developed countries and regions.
Hong Kong is the world’s most expensive city to buy a home, according to another report released in April.
Xie attributed the sky-high property price to the housing market being lead by local business leaders.
“The Hong Kong government is not really in charge (even though) most people think that they need to listen to Beijing, but perhaps more importantly, they are really influenced by the big property tycoons,” said Xie.
“The key is that the political structure here is neither the Singapore situation where the government is on top, nor like Taiwan (where) it’s a democracy and people can vote,” said Xie, who recently penned an opinion piece in the South China Morning Post on the subject.
Hong Kong is “in between — just a bunch of business people calling the shots,” he added.
Beijing needs to distance itself from the tycoons in Hong Kong, said Xie.
“Every time, there’s a disturbance in Hong Kong, Beijing goes to these business guys for advice; you know something’s very wrong,” said Xie. “These guys are causing the trouble in Hong Kong, why are you going to them for advice every time?”