Pandemic homebuyers have been met with record-high prices, few options and fierce competition. Now the world’s least affordable housing market, Hong Kong, is set to break its historical ceiling, Bloomberg News reported.
In the densely-packed city of 7.5 million people, demand remains high, despite a troubled economy and the looming specter of a mass emigration spurred by political turmoil. Buyers have flooded the market for luxury apartments: Recently, 88 vied for a single unit at New World Development’s Pavilia Farm III.
Buying isn’t much easier elsewhere in the city, as secondary market transactions in Hong Kong’s 10 biggest housing developments are expected to reach a 23-year high, according to Centaline Property Agency.
With low interest rates fueling a global rush to buy, Hong Kong’s success isn’t without its obstacles. The British Nationals Overseas visa program, which grants certain Hong Kong residents the ability to move to the U.K., received 34,000 applications in the first quarter of 2021, the U.K. Home Office told Bloomberg News.
As mass protests engulfed the city in 2019 over China’s push to exert greater control over Hong Kong’s government, residents of the former British territory still could leave, potentially hurting the housing market.
Yet experts aren’t concerned. Any potential migration isn’t enough to offset the “severe supply-demand imbalance” in Hong Kong’s housing market, Nelson Wong, head of research at Jones Lang LaSalle in Greater China, told Bloomberg. In fact, Hong Kong is so starved for space that it plans to spend $80 billion, roughly half its fiscal reserves, to build artificial islands off Lantau Island.
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Only 52 percent of Hong Kong residents actually own their apartments, a disparity that troubles Beijing, which considers high property prices a root cause of social discontent, according to the publication.
In response, Hong Kong’s government has seized more land in the New Territories to build housing and made it easier to obtain a home loan. It is even reportedly considering a vacancy tax on new, unsold homes to help fill “ghost units” at the Dragon Lodge mansion, which sit vacant despite premium views.
Buyers from mainland China are also keeping demand high, accounting for 11.2 percent of purchases by value in the first four months of the year. Shares of Hong Kong’s four largest developers are all up in 2021, with shares of CK Asset Holdings, which recently broke the record for priciest apartment sale in Asia, up 32 percent from last year.
[Bloomberg News] — Joe Lovinger