Hong Kong’s property prices have been escalating every month for the past 21 months, well above the rate of average wage growth despite the government imposing a range of curbing measures, and many buyers are being priced out.
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House prices in Hong Kong grew by 1.4% in December, according to figures from the Rating and Valuation Department, with average homes now worth 19.4 times the average income. Despite London’s current property pricing crisis causing many areas to be deemed unaffordable, properties in the UK capital are an average of 8.5 times income, which puts the Hong Kong market into perspective.
Per square foot, buyers of prime homes can expect to pay an average of HK$24,900 (around £2,280), while a three-bedroom flat in the Mid-Levels area goes on the market for an average price of HK$150m (£13.7m). In Mid-Levels West, Knight Frank currently has a small one-bedroom apartment, of just 456 square feet, listed for sale at HK$12,500,000, which equates to around £1.1m.
Necessary downsizing
A UBS report stated: “Real incomes have virtually stagnated in Hong Kong for many years. So housing is less affordable here than any other city we considered.” Although the government has attempted to curb house price rises, including measures such as tightening mortgage restrictions, prices have continued to escalate.
The rise of micro-apartments has been one major effect of the lack of affordability, with tiny homes ranging from 200 to 400 square feet in size being developed across Hong Kong. The China Morning Post reported that 98 such properties went on sale in a 25-storey tower in the Mong Kok region in August, and all were sold within a day of going on the market.
Unfortunately for a number of buyers, many predict that Hong Kong has not seen the last of its rising property prices, with Knight Frank forecasting a 10% increase over the course of 2018.
