Why Hong Kong’s housing bubble is only getting bigger

Prices increased 11% this year

Central District, Hong Kong. (Mstyslav Chernov)
Central District, Hong Kong. (Mstyslav Chernov)

Despite attempts by the government to curb Hong Kong’s housing market, prices continued to climb this year as demand outpaced supply.

Housing prices rose 11 percent this year, and Colliers International Group projects that they will grow another 8 percent to 10 percent next year. Mortgage rates are low and developers are offering hefty financing packages, Bloomberg reported. Sun Hai Kai Properties, for instance, is providing buyers with financing of up to 120 percent of the purchase price of units at its Cullinan West project.

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“Now it is very hot, because of the hot money rushing in,” Raymond Ho, deputy senior director of residential development and investment at Savills, told Bloomberg. “There is more record-breaking coming.”

In October, a four-bedroom house in the city’s Peak neighborhood sold for $149 million. A penthouse on Peak Road also sold for over $13,000 a square foot this fall. Both deals were said to be records in Hong Kong.

Meanwhile, the number of new residential units that are coming to market can barely keep up with the number of mainland Chinese who become residents every year. An average of 20,000 new units hit the market every year, which is roughly the number of people from China who become permanent residents of Hong Kong annually. [Bloomberg]Kathryn Brenzel