Hong Kong'S Luxury Housing Market: Hot And Cold

Although the epidemic situation in Hong Kong has not been reversed, the once silent super luxury housing market has been active again.

According to the data of the first-hand residential property sales information network compiled by the Meilian real estate data and research center of Hong Kong, the data of the third quarter as of September 7 showed that there were 72 first-hand super luxury houses with a transaction price of more than HK $50 million, even exceeding 70 in the second quarter, and 16 transactions of more than HK $100 million, only one decrease compared with 17 in the previous quarter.

Take the peak South District, a traditional super luxury residential area, as an example. In August this year, there were about 9 transactions, and the volume was flat month on month. However, the transaction amount was as high as HK $4.4 billion, a sharp increase of about 5.6 times compared with July, and the number of transactions over HK $100 million also increased significantly. In a short period of one month, about five super luxury housing transactions were recorded in the District, including the transaction of a western style house at 40 xiangdao road for HK $285 million, the transaction of No.8 Deep Bay path for HK $179.6 million, and the transaction of Yu hee garden house on belluday road for HK $200 million.

Second hand super luxury houses are also favored by the market. According to the data, the number of second-hand residential units registered in the first quarter of this year rose sharply from 34 in the first quarter of this year to 56 in the second quarter, and reached 56 in the third quarter as of September 7. Second hand trading in supermarkets over HK $100 million also recovered, with 9 transactions recorded in the same period, which was flat with the second quarter.

"The shortage of land supply in Hong Kong is serious and the supply is short. High quality luxury housing is a scarce commodity," he said. "With the easing of the epidemic situation, the mainland and Hong Kong have the opportunity to resume customs clearance. It is expected that the performance of luxury houses with a value of more than 100 million Hong Kong dollars will further recover in the fourth quarter. Sales of second-hand luxury houses are expected to reach HK $3.5 billion in the fourth quarter, and they are expected to win more than HK $3 billion Bu Shaoming, chief executive of Meilian real estate and Housing Department, told reporters of the 21st century economic report.

Hong Kong real estate consulting service company Lai Fang released the Asia Pacific Property Value Trend Report on September 10, tracking the property price trend of 22 markets in the Asia Pacific region. It was found that under the new crown pneumonia epidemic situation, about 60% of the property value in the Asia Pacific region decreased in the first half of this year. But among them, luxury houses have a strong resistance to fall, and about 60% of them remain stable or rising. Although Hong Kong's property prices are still slightly lower than that in 2019, Hong Kong's property prices are still suffering from a slight decline of 4%.

Zhang Qiaochu, managing director of Hongliang consulting and evaluation Co., Ltd., said frankly: "there has always been a market for high-end luxury houses. When the market is good, there are fewer owners to sell them. Now the market situation is not clear, but the sale has increased, which has also contributed to more transaction cases."

Zhang Qiaochu told the 21st century economic report that in recent years, the target customers of Hong Kong's luxury housing market can be said to be "completely different". "Most of the buyers of super luxury houses on the top of Taiping mountain or at the middle of the mountain are mainland rich people, while the hierarchical units in the East and South are mainly local buyers in Hong Kong."

Low price luxury house

However, in contrast, the low-priced luxury housing market below HK $50 million has frequently seen a wave of selling and price splitting. Recently, the chairman of the New Democratic Party of Hong Kong and former chairman of the Security Bureau, Mrs. Ye Liu Shuyi, recently posted an article on social media. She went for a walk on Baoyun Road on the top of the mountain. She saw a marvelous scene on the mountaineering trail. Along the way, there were advertisements for selling houses on lampposts, railings and pavilions. All of them were luxury houses. Most of them were located in traditional luxury residential areas such as peak, Deep Bay and shallow water bay List "urgent sale" and "cut price".

It is understood that the price of a three room flat with two parking spaces at dongshantai in the eastern half of Hong Kong Island is HK $15.5 million, while the owner of a 625 square foot mansion on Old Peak Road has reduced the price from HK $15.5 million to HK $14.9 million.

"The target customers of these low-priced luxury houses are mainly house changers, but under the current market situation and economic uncertainty, many middle-class families are not willing to change their houses. In contrast, most of the super luxury houses that can buy more than HK $50 million are rich people. They mainly buy such properties for investment or wealth allocation, and a small part for self housing. " The executive director of economy, Mr. Lin Haofang, told reporters in the 21st century.

He pointed out that another reason for the increase in the number of transactions of super luxury houses is that "some luxury house owners have a large bargaining space, about 10% - 15%, so the transaction price is relatively favorable."

According to Hong Kong's North Point luxury housing agent to 21st century economic report, a luxury housing unit with a practical area of 912 square feet in baiweishan, North Point, was bought by the buyer for HK $28.612 million in 2018, but recently it was taken over and sold by the bank because of inability to repay the loan. In July this year, it was sold for HK $21.6 million, with a unit price (square foot) of only HK $23710, a sharp drop from the purchase price two years ago HK $7012000, a decrease of 25%.

The agent said that the owners of the above-mentioned luxury houses used more than HK $100 million to sweep into a number of new luxury housing units in Hong Kong two years ago. However, at least four units have been taken over by the banks because they are unable to repay the loans, which has become the so-called "bank main offer".

According to the data of the rating and Valuation Department of Hong Kong, as of the end of July this year, the rate of return on rent for large class E units with a usable area of 1722 square feet or more was 1.8%, down 0.1% month on month, a record low. According to Lin Haowen, the overall return on investment of luxury houses in Hong Kong is about 2% - 2.2%, lower than that of ordinary residential buildings (2.2% - 2.5%), while that of commercial office buildings can reach 2.5% - 3%.

Learn from Singapore's "group housing" model

In the past decade or so, the prices of private housing in Hong Kong have soared, while wages have only increased slightly. The high property prices have made many Hong Kong people "look at the buildings and feel disappointed". In recent years, the gap between the rich and the poor in Hong Kong has been worsening. Housing has always been regarded as the crux of people's livelihood problems, and has also led to many social conflicts and conflicts.

According to the latest survey report released by demographia, Hong Kong has become the most affordable city for 10 consecutive years. As of the third quarter of last year, the median property price in Hong Kong was HK $7.04 million, while the median household income was $338000. This means that ordinary Hong Kong families need not to eat or drink for up to 20.8 years in order to realize home ownership.

At the same time, due to the delay in solving the problem of land supply and the serious shortage of public housing supply, the waiting time of low rent housing, commonly known as "public housing", for low-income families has been continuously extended. According to the data released by the SAR government, as of June this year, there were 259700 applications in the public housing queue, with an average waiting time of 5.5 years. According to Huang Yuanhui, former chairman of the subsidised housing group of the housing authority of the SAR government, the relevant figures lag behind for several years. Some families need to wait for nearly 10 years to obtain satisfactory public housing units.

Wang Yujian, a professor of political economics at the University of Hong Kong, believes that to solve the housing problem in Hong Kong, the SAR government should refer to Singapore's "group housing" model, and the only way out is to implement the "Hong Kong people's group housing" scheme. Only by allowing most Hong Kong people to buy public housing units at affordable prices can they realize real universal sharing.

He pointed out that the first step in the implementation of the "Hong Kong people's group housing" scheme is to comprehensively re launch the optimized "tenants buy their own" scheme. Public housing residents can buy their rental flats at half price and pay only 5% or 10% of the down payment, and reduce the premium for sale of HOS and TPS. It is estimated that the scheme will benefit nearly 3.3 million public housing and subsidised housing sales, raising the overall home ownership rate of Hong Kong from less than 50% at present to more than 70%.

As a small and highly open economy, Singapore has been implementing the home ownership scheme since 1964 to encourage low - and middle-income people to buy government - built flats. At present, Singapore has formed a housing system dominated by government housing and supplemented by private housing. As early as 2016, as many as 82% of Singapore's citizens lived in group houses.

Wang Yujian has been studying housing policy and advocating rent and purchase scheme for 30 years. He told reporters that since the 1980s, the price increase of private housing in Hong Kong has been greater than that of public housing. For most Hong Kong people, there has been a "fault" in the housing ladder. Wang Yujian believes that the reconstruction of the home ownership ladder should not start with lowering the prices of private housing, which may bring about many economic sequelae, financial risks and even economic recession.