Kowloon Walled City is still way worse than that. You can expect that in each "flat", multiple people sleep on the small floor. The structure by putting multiple wooden stories on top of each other is very unstable. And add that to the very rampant crime due to not a tiny bit of law enforcement. Nowadays tenants in subdivided flats only suffer from a bit of theft. Even in poor areas, the crime rate is actually very low and you are very unlikely to get yourself killed by crime. But in the Walled City, you can get yourself killed due to questionable unlicensed medical practices or burgulary and triad fights. I can't really imagine what it is like in Walled City because it luckily doesn't exist now and has turned into a park that I frequent go to. There is a reason why it was the densest populated area in the whole world.

The housing in Hong Kong keeps getting worse. Usually coffin cubicles and other subdivided flats are only present in old districts such as Sham Shui Po or To Kwa Wan. And now not many years ago there was news on newly built flats that were only 300 sq. feet including area occupied by walls.

The problem is when there just isn't enough land and the land prices are expensive, you cannot ban these coffin cubicles because there will always be a lot of people who need them. The waiting list for public housing is extremely long (Is it 14 or 40?). The poverty line is strict and there are people who deny raises just to be eligible for poverty benefits. The government is trying to tell people to go to the Greater Bay Area, but that means leaving your home and going to a place with a different "language". And not to mention the political stigma.

Btw people bought coffin cubicles because they are relatively "cheap". But they are actually extremely expensive in terms of price per sq. feet. Homeowners are really squeezing out profit from desperate populations. There is a reason why the government decides to blame the housing problem for the reasons to the protests.