More Than a Third of Hong Kong Consumers Said Their Income Increased Recently
- Significantly more consumers reported improved household income over the past three months and anticipate income growth in the coming year compared to a year ago
- One quarter (25%) of consumers said they won’t be able to pay at least one of their current bills and loans in full, up from 17% a year ago
- Growing appetite for credit amid economic uncertainties, most notably among Gen Z
- More consumers planned to apply for mortgages, likely influenced by recent favourable regulatory updates
Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its Consumer Pulse Study for Q3 2024 which shows that many Hong Kong consumers expressed a promising financial outlook. In the TransUnion survey of adult Hong Kong consumers in Q3 2024, a growing number of those surveyed (35%) reported that their household income had increased in the last three months – a significant seven-percentage point year-over-year (YoY) jump from Q3 2023.
This optimism is most pronounced among Gen Z1 consumers, with more than half (55%) indicating an increase in income, compared to 45% in Q3 last year. At the same time, this age group showed a significant drop from 41% to 30% from Q3 2023 to Q3 2024 in those who reported their income stayed the same in the past three months. All these insights indicate that there is a shift among younger consumers toward greater financial mobility.
Looking ahead, growing confidence in future earnings persists among Hong Kong consumers. In Q3 2024, 42% of all respondents anticipated their income will increase over the next 12 months, up seven-percentage points YoY. Conversely, the percentage of consumers expecting an income decrease in the next year dropped three-percentage points YoY to 15%.
Cautious optimism with mixed sentiment
Despite the positive sentiments about income, Hong Kong consumers expressed mixed views about their financial outlook. One quarter (25%) in Q3 2024 said they won’t be able to pay at least one of their current bills and loans in full, up from 17% YoY. This shift highlights a potential growing anxiety about financial stability among consumers, which could be influenced by external economic factors such as inflation and market fluctuations. Although the Hong Kong Monetary Authority (HKMA) has recently reduced the city’s base rate following the decision of the US Federal Reserve2, consumers will need to remain resilient and patient until potential further cuts to make the cost of credit more manageable, particularly for borrowers who are struggling.
To better understand these nuanced consumer sentiments, TransUnion asked respondents to point out their biggest household financial concerns for the next six months. The results show that inflation for everyday goods is the leading concern, with 60% citing it in their top three biggest concerns affecting their household finances in the next six months, followed by a recession (58%) and jobs (49%). Digging a little deeper into the recession concerns, 44% of those surveyed believe Hong Kong is currently in a recession, a five-percentage point increase from the previous quarter.
With concerns around recession and inflation high, 39% of consumers said they saved more in an emergency fund and 23% increased their retirement savings in the past three months, indicating a shift towards prioritising financial security amidst uncertainty. These consumers are well-positioned to benefit from the higher interest rates in Q3 2024, especially in fixed deposits, where recent rate cuts have not affected returns. Consumers also anticipate more controls in spending, with 40% saying that they plan to reduce discretionary spending such as dining out, travel and entertainment. This cautious sentiment is reflected in a 10% YoY decline in business for Hong Kong restaurants during this year’s Mid-Autumn Festival3.
“Our latest Consumer Pulse Study for Q3 2024 reveals a complex landscape with cautious optimism among Hong Kong consumers. While there is a notable increase in income and confidence especially among the younger generation, we also see rising concerns about financial stability. However, the proactive steps consumers are taking – including prioritising savings and adjusting their spending habits – demonstrate their commitment to maintaining financial resilience in the face of potential uncertainties. This adaptability is a positive sign for a mature market," said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion.
Stronger credit demand anticipated
In a time of economic uncertainty, the flexibility offered by credit is one of the important opportunities to support financial resilience. In fact, 51% of consumers said having access to credit and lending products is extremely or very important to achieve their financial goals, an increase from 47% in Q3 2023.
Consumers expressed higher interest in credit in Q3 2024, with 38% of respondents saying that they plan to apply for new credit or refinancing existing credit, in the next year, compared to 35% in Q3 last year. Among those who plan to apply for new credit or refinancing existing in the next year, 45% said they’ll apply for a new credit card, and nearly one quarter (23%) will request an increase in available credit for an existing credit card. More than one third (34%) said they’ll apply for a new personal loan and 18% are planning to refinance a personal loan. Gen Z showed the strongest appetite for credit, with close to half (48%) saying they’ll apply for new credit or refinance existing credit in the next year – up from 43% one year ago, while 41% of Millennials, 38% of Gen X and only 13% of Baby Boomers expressed similar plans. With the recent September rate cut, a further uptick in credit activities is expected, as such cuts historically lead to increased borrowing.
The demand for new mortgages increased significantly in Q3 2024 compared to the same time last year. Among Hong Kong consumers who plan to apply for new credit or refinancing existing credit in the next year, one in five (20%) said they’ll plan to apply for a new mortgage, up from 14% a year ago and from 13% in Q2 2024. This increase is a positive sign for the property market and comes following the introduction of countercyclical macroprudential measures for property mortgage loans by the HKMA in February this year4.
Despite this appetite for credit, in Q3 2024 more than one third (34%) of consumers said they considered applying for new credit or refinancing existing credit, but ultimately decided not to, an increase from 30% a year ago. The reasons for this abandonment are multifaceted, with 26% citing the cost of new credit or refinancing being too high, another 26% indicating that it takes too long to get a decision, and similarly 26% saying it took too much work to apply. Additionally, 24% of respondents reported finding an alternative funding source.
“The positive outlook on household income, along with cautious consumer sentiment and an anticipated lower interest rate environment, creates a promising landscape for growth in Hong Kong’s credit market. The increasing demand for new credit products, particularly among Gen Z consumers, presents exciting business opportunities for financial institutions,” said Sun. “However, challenges remain that can impede consumers from applying for new credit. We urge lenders to actively address these barriers to empower more consumers to explore credit options while at the same time enhancing financial inclusion.”
TransUnion’s Q3 2024 Consumer Pulse Study consisted of a survey of 860 adults 18 years of age and older residing in Hong Kong between 15–31 July, 2024. This quarterly study examines shifting consumer attitudes and behaviours based on the dynamics of income, debt, and identity theft. For more information, please view the Consumer Pulse Study Q3 2024 Infographics.
