By Brendan Clift
As Hong Kong residents, we know it’s expensive to buy or rent a flat in this city and it seems to be getting worse.
Data provided by the Hong Kong government backs this up. Here’s how residential property prices have surged since 2001, tracking price to buy (left axis) and cost to rent (right axis) per square metre for an average-sized apartment.
You might have spotted that the cost of buying seems to be growing more strongly than the cost of renting. Here’s a closer look at how purchase prices are outpacing rents — suggesting that the market regards apartments as a growth investment providing capital appreciation rather than a yield investment providing rental income.
So far we’ve focused on Hong Kong island, where you might expect the biggest bubble. But, in fact, the premium to buy in Kowloon has outstripped the premium to buy in Hong Kong. The New Territories is the most affordable option for new buyers today, with the lowest actual price as well as the lowest ownership premium over time.
According to the Hong Kong Housing Authority, 53.8 percent of the population lived in private housing last year. With an average household size of 2.9 people and an average apartment size thought to be 45 square metres (484 square feet), the typical Hongkonger is living in a 15 square metre space — and paying plenty for the privilege.
While prices remain on an upward trajectory, apartment sizes are doing the opposite. Prices for flats smaller than 40 square metres are proportionate to — and outstripping rents faster than — those of average-sized flats, as developers bring more “shoebox” apartments onto the market and the public obliges by snapping them up.
The rental data can be viewed here and the price data here.
Brendan Clift is a Hong Kong-based journalist, publisher and teacher. He covers areas including law, business, politics, arts and the environment.
