Hong Kong not only remains the least affordable housing market in the world, but it has now set a new record.
Hong Kong has now been deemed the least affordable housing market in the world for nine years.
To buy a home, meaning an average-sized apartment, an average family with an average income needs to save for up to 21 years – that is, if they can survive without spending money on anything else.
This is a fresh record for the survey done by urban planning consultancy Demographia since 2005. This year’s record tops last year’s, which was 19.4 years.
Demographia found that the median multiple, which is the ratio of the median property price to the median household income, was 20.9 times in Hong Kong. The consultancy derived the figure based on a home price of HK$7.169 million and household income as HK$343,000.
By Demographia’s definition, a city with a median multiple of 5.1 or above is considered “severely unaffordable”. Hong Kong’s median multiple is four times that.
Demographia added that home prices in Hong Kong could drop between 15 and 25 percent this year, but the market would still remain very unaffordable.
Government data shows that during the past four months, prices of Hong Kong’s lived-in homes have gone down 7.2 percent. Despite the drop, scholars believe that the home prices in Hong Kong will only continue to rise.
They tuk muh flat!
Mr Simon Lee Siu-po, lecturer of Accountancy at the Chinese University of Hong Kong (CUHK), says that Hong Kong offers a lot of advantages that attract foreigners to work and buy homes in the city.
He cites Hong Kong’s competitiveness, stable environment, abundant job opportunities, low unemployment rate and lack of severe natural disasters.
Mr Terence Chong Tai-leung, professor of Economics at CUHK, also explains that a strong demand for housing will only keep pushing up the prices.
“A heavy inflow of mainland Chinese capital (flows) into Hong Kong’s property market. The mainland Chinese like to buy properties here and Hong Kongers don’t want to leave,” he says.
Mr Chong urges the government to help young people buy a home to increase their sense of belonging in the city.
“The government can implement plans to allow people to buy a 1,000-square-foot flat with HK$1 million,” he suggests.
And again, Singapore
He also advises the government to learn from Singapore to supply as many public housing units as possible to adjust the proportion of public and private flats in the market. Currently, for every 10 flats in Hong Kong, six are public units.
Mr Chong adds that the government should set a restriction on the minimum size of flats in the private market.
In recent years, developers have been launching nano-flats smaller than 215 square feet to meet demand. Last year, a developer set a record for launching the smallest flat ever – with an area of 128 square feet – with a price tag of over HK$2 million. To compare, a standard parking lot is 135 square feet.
The survey by Demographia covered 309 cities in eight countries.
Vancouver ranks second with a median multiple of 12.6 years, followed by Sydney with 11.7 years. Meanwhile, Singapore records a median multiple of 4.6 years.
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