Young expats on lower packages wouldn't be sending their children to private schools back home anyway.
I don't think young expats are stable nor long term focused on HK. Many come then jet out after a year or two. They don't give it a real shot, as the grass is always greener.
HK can maintain competitive as long as you are comparing other countries. You may be comparing the past but look at Singapore, they also have the tax to buy property and people still go there. I think HK is hands down better than Singapore. But I would hate the hot weather all year long amongst other things unique to Singapore.