Real Estate

Hong Kong tops list again for least affordable homes


Hong Kong’s housing market has been ranked the least affordable in the world for a ninth successive year, despite a recent drop in prices.

The global survey by public policy group Demographia described the city as “severely unaffordable”, with median prices for a home reaching 21 times annual household income.

Prices have almost tripled during the past decade, buoyed by Chinese buyers and investors from overseas.

A dearth of housing stock and banks offering an abundance of cheap credit have been the two main drivers of prices, according to Hong Kong’s de facto central bank.

Vancouver was ranked the second least affordable city in 2018, displacing Sydney, which held the spot the previous year. Property prices in the Australian city fell about 5 per cent last year, according to Moody’s, the rating agency.

Prices in Hong Kong have, however, fallen back sharply since August, dropping almost 10 per cent, according to Centaline index.

Uncertainty over global economic growth and trade tension between China and the US had affected sentiment, said analysts.

“Slower growth in China and emerging signs of a slowdown in the US cloud the outlook for Asian property,” said Andrew Haskins, director of research in Asia at Colliers International. “However, interest rates ought to rise more gradually than previously expected, holding funding costs down for developers and investors.”

The end of post-financial crisis stimulus measures, in the form of quantitative easing and low interest rates, is set to drain liquidity from the global economic system, which could also weigh on prices in Hong Kong’s property.

“I have a negative outlook for Hong Kong property, based on the global liquidity flow and interest rates,” said Phillip Zhong, an analyst at Morningstar.

“The sector is very investor-driven, so prices have a lot to do with investor sentiment. A falling property market will cause a lot of investors to sell to lock in capital gains.”

Developers have also been offloading property at a discount. “When they put a project on the market, they are very happy to cut prices to ensure a quick sale,” said Mr Zhong. At the end of last year, Sino Land priced one part of its development at a 15 per cent discount to nearby projects,” he added.

He noted that shares in a lot of Hong Kong property developer had been volatile last year, although some had rebounded since the start of 2019 as investors looked for bargains. Shares in Sun Hung Kai fell about 14 per cent last year, but are up about 11 per cent so far in 2019. Henderson Land dropped about 12 per cent in 2018 and have rebounded by 10 per cent this year.



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