By Angus Luk<\/p>\n\n\n\n
Apr 2023 : How to calculate whether it\u2019s best to buy or rent right now<\/p>\n\n\n\n
On 23 March 2023, the US Federal Reserve raised interest rates by 0.25% as expected, but major banks HSBC and Hang Seng Bank announced their best lending rates would remain unchanged at 5.625%. The other note-issuing banks \u2013 Bank of China (Hong Kong) and Standard Chartered \u2013 kept their prime rates steady at 5.625% and 5.875%, respectively. Bank of East Asia also left its prime rate at 5.875%. Banks not reacting to the hikes reflects their belief that the Fed will soon stop turning the screws, which will benefit the property market, increasing prices H2.<\/p>\n\n\n\n
The interest rate is expected to remain at more than 3% in 2023. Banks had begun actively competing for mortgages by lowering the ceiling (Hibor mortgages) before the Fed\u2019s move to offset the impact of future interest rate hikes, positively affecting the Hong Kong real estate mortgage market. In fact, market sentiment is buoyed due to the perception that interest rate hikes will slow, Hong Kong\u2019s borders being open, and the rapid increase in mainland visitors. Some international valuation firms, excluding Colliers, and local agencies expect the market to gain steadily and prices to rise by about 10% before the end of the year. We remain cautiously optimistic.<\/p>\n\n\n\n
The market is indeed recovering and will benefit the economy. Sellers will profit from their transactions, which will be transferred into different commercial sectors. However, high interest rates directly impact monthly mortgage repayments; most likely, they will not fall this year.<\/p>\n\n\n\n
So, the big question, then, is whether to rent or buy.<\/p>\n\n\n\n
These two scenarios can be analysed using the example of a small unit in City One, Shatin:<\/p>\n\n\n\n
In scenario 1, the buyer mortgages 50% of the price, and the monthly payment is HKD11,885, so HKD1,115 lower than the current rent.<\/p>\n\n\n\n
In scenario 2, the buyer takes a 90% mortgage, and the monthly payment is HKD21,339, HKD8,339 over the current rent.<\/p>\n\n\n\n
It is easy to understand that if more of the price is mortgaged, the repayments are higher and possibly double the monthly rent.<\/p>\n\n\n\n
The scenario is slightly different if the buyer is thinking of the flat as an investment. Then the simple question is: Would the rental return be higher than the mortgage repayments? If the gross rent is higher than the mortgage, buying would be better, and vice versa.<\/p>\n\n\n\n
Using this method on the City One Shatin unit gives the following result:<\/p>\n\n\n\n
Mortgage rate:<\/strong> 3.375%<\/p>\n\n\n\n Rental rate of return<\/strong> = HKD13,000 \u00d712\/HK$5 million = 3.12%<\/p>\n\n\n\n This asset\u2019s rental yield is 3.12%, lower than the current minimum mortgage rate of 3.375%. Compared to the above-mentioned total payment and interest expenses, the current rental return rate is lower than the mortgage interest rate.<\/p>\n\n\n\n When deciding to buy or rent a property, the primary considerations are affordability and income. Buyers have a host of miscellaneous expenses to cover \u2013 printing fees, legal fees, and agency commissions. Long-term costs include rates and management fees. Miscellaneous expenses when renting a property are not as high. In many cases, rates and management fees are included in the rent, commonly known as an “all-inclusive banquet”.<\/p>\n\n\n\n The US interest rate hikes are not likely to be long-term. Their purpose is to suppress inflation. Nevertheless, they have become the market\u2019s central focus, with many prospective buyers adopting a \u201cwait and see\u201d attitude. According to Centaline\u2019s records on 13 March, around 14,526 second-hand homes were for lease, and 36,030 units for sale.<\/p>\n\n\n\n Analysing price and size reveal that if buyers use a high loan ratio (MIP), the monthly repayments on homes within HKD12 million are higher than 56% of the asking rent of a similar size. If the down payment is insufficient, and a MIP plan is needed, renting a flat for a year may be best and observing the market conditions during this period.<\/p>\n\n\n\n F<\/strong><\/a>ind or sell properties on Spacious<\/a><\/strong><\/p>\n\n\n\n Mar 2023 : Hong Kong\u2019s cut to ad valorem stamp duty will spur home sales and prices<\/p>\n\n\n\n Financial Secretary Paul Chan Mo-po delivered his budget to the Legislative Council on 22 February. Among the items he mentioned was a HK$5,000 consumption voucher and adjustments to the ad valorem stamp duty for the sale of residential and non-residential property.<\/p>\n\n\n\n The changes to the stamp duty affect the value bands of the tax levied when property is transacted and are intended to make it easier for families to purchase homes in the small to medium range.<\/p>\n\n\n\n In January, the secondary residential market was stimulated when anti-COVID-19 measures were relaxed and the border between Hong Kong and mainland China opened. Sentiment switched from pessimism to optimism. <\/p>\n\n\n\n According to Midland Research\u2019s Department, 3,987 private residential transactions were recorded up to 23 February, for the month, 10.8% more than 3,599 cases in the whole of January 2023. <\/p>\n\n\n\n Of those sales, 541 were primary and 3,446 secondary transactions, an increase of more than 54% and 6%, respectively. <\/p>\n\n\n\n The Rating and Valuation Department announced that the private residential price index stood at 336.1 as at 24 February, a monthly increase of 0.6% from 334.1 points in December, returning to the level in June 2017.<\/p>\n\n\n\n All the indices showed a MoM increase, and most were at 2017 levels. The increase was more noticeable in larger units, rebounding 0.63% MoM to 304.4 points in January on speculation that the border would open. Small and medium-sized units rebounded 0.6% MoM to 337.3 points. These two indices points are at the levels of October and April 2017, respectively.<\/p>\n\n\n\n Prices increased the most for Class C (753 to 1,076 sq. ft.). In January, the index rebounded by 0.85% from December last year to 307.2 points, to October 2017 levels. The Class D units ( 1,076 to 1,721 sq. ft.) index rose 0.76% MoM in January to 305.3 points to equal November 2017 levels. Class B (431 to 752 sq. ft.) and Class A units (less than 431 sq. ft.) rebounded by 0.68% and 0.52% MoM in January, to 324.7 points and 368.2 points, respectively. Class E units (1,722 sq. ft. or more) reported 300.4 points in January, a slight increase of 0.07% MoM, rising for the second consecutive month. The index is currently at October 2020 levels. In addition, such units have recorded fewer than 20 transactions for nine straight months.<\/p>\n\n\n\n It is believed that secondary home prices have successfully bottomed out and rebounded. <\/p>\n\n\n\n January\u2019s rent index was 173.9 points, down 0.6% from December\u2019s 175. Rents fell 3.1% in the past five months. Small and medium-sized units (Classes A, B, and C) were at 176.8 points, down 0.6% MoM; large units (Classes D, E) were at 141 points, down 0.2% MoM.<\/p>\n\n\n\n Rents decreased because the would-be buyers who had bided their time by leasing were now back in the sales market, leaving rental vacancies behind them. Rents are expected to follow the property price rebound. Furthermore, the government\u2019s talent acquisition and investment immigration plan, and the return of overseas students and administrative personnel to Hong Kong after the border opened, are bound to increase housing demand.<\/p>\n\n\n\n Last year, some 80% of transactions were below HK$10 million, so the relaxed stamp duty will benefit most first-time home buyers. Undoubtedly it will promote transaction volume and impact first-quarter property prices.<\/p>\n\n\n\n Based on the Budget, ad valorem stamp duty will be HK$100 for homes up to HK$3 million instead of HK$100 for homes up to HK$2 million previously. The tax changes are on a sliding scale and apply to homes worth HK$10 million or less, saving buyers HK$67,500 on a home worth HK$9 million. The tax adjustment is expected to benefit about 37,000 first buyers annually<\/p>\n\n\n\n Hong Kong developers think this is an excellent time to release stocks within the HK$10 million price range. They have been actively launching units since January.<\/p>\n\n\n\n Wheelock Properties\u2019 Koko Rosso<\/a> offered 148 units in Cha Kwo Ling, near Lam Tin MTR station. The price list was set under HK$10 million, and the 148 units launched were sold out within five hours Friday. The total transaction amount was around HK$1.104 billion. <\/p>\n\n\n\n Meanwhile, Bal Residence<\/a> from Lai Sun Development and the Urban Renewal Authority has announced the pricing for 56 units for the coming week. They offered a maximum discount of 11.75%, with the cheapest at HK$5.8 million.<\/p>\n\n\n\n Chan mentioned securing land for 72 000 private houses in the next five years, meaning an average of 14 400 annually.<\/p>\n\n\n\n When analysing residential transactions from the last five years, it becomes apparent that Hong Kong needs an average of 16,000 homes in the primary sector and 45,000 in the secondary sector homes each year. <\/p>\n\n\n\n Without any vacancy tax to spur them, developers control how many homes are released and will choose the timing that is to their advantage. The new stamp duty reduction will encourage them to speed up sales of one and two-bedroomed flats. Primary supply is relatively limited, and unsuccessful first-time buyers usually seek their homes in the secondary market. <\/p>\n\n\n\n According to the Centaline Agency\u2019s record, there are around 36.359 units available, with more than 50% (18,531) in the New Territories. First buyers usually prefer to choose younger units with scaled facilities; for example, Tseung Kwan O recorded 357 transactions in January. <\/p>\n\n\n\n Second-hand sellers raised their asking prices in January, and the new stamp reduction may temporarily make them optimistic enough to raise them again. More buyers will be more eager to purchase a property after the announcement. Still, even for a HK$9 million property, a potential buyer only saves around HK$67,000. To be savvy, buyers should seek initial indications from various banks if they will take the 90% MIP. Although the interest rate hike cycle is predicted to end soon, it has not finished yet, and the US Federal Reserve may still raise the lending rate significantly.<\/p>\n\n\n\n F<\/strong><\/a>ind or sell properties on Spacious<\/a><\/strong><\/p>\n\n\n\n Feb 2023 : What the Year of the Rabbit could have in store for Hong Kong\u2019s Property market <\/p>\n\n\n\n The Year of the Tiger has slunk away, and the triple pressure of the COVID-19 pandemic\u2019s Fifth Wave, the havoc wreaked by anti-pandemic measures, and the multiple prime interest rate hikes have certainly taken their toll.<\/p>\n\n\n\n Hong Kong was trapped in an internal cycle as tight border controls with the rest of China and other nations trapped left locals to dominate purchasing power. The viral rollercoaster made predicting where the market was headed next challenging, especially given the sharp drop in tourist numbers. <\/p>\n\n\n\n The US Fed\u2019s rate hikes stoked acquisition costs, making prospective buyers more cautious and depressing the secondary market transaction volume. Slender negotiating margins and even further haggling between seller and buyer eventually caused property prices to lose their support. The myth that property could only increase in value was severely dented. Sellers could only expand their discounts and hope.<\/p>\n\n\n\n According to Land Registry data, supplemented by data from agencies, as of 10 January 2023, 55,225 transactions were recorded in the Year of the Tiger\u2019s overall property market for approximately HK$556.4 billion. <\/p>\n\n\n\n Compared to the 92,120 registrations in the Year of the Ox (12 February 2021 to 31 January 2222), transactions decreased by 35,020 year-on-year or a sharp 38%. This result ended the two-year expansion from the Year of the Pig (5 February 2019 to 24 January 2020)and the Year of the Rat (1996-1997), which had the fewest transactions. <\/p>\n\n\n\n Compared to the previous Year of the Tiger (14 February 2010 to 2 February 2011), which had 153,600 transactions, last year dropped 62%. In addition, with the simultaneous decline in property prices and transaction volume, the registration amount also fell sharply.<\/p>\n\n\n\n An analyses was carried out on 137 significant residential developments using different agencies to track their 2022 performance by unit and current asking unit rates. <\/p>\n\n\n\n The RVD\u2019s latest residential Index (as of November 2022) fell 13.8% from 393.9 to 339.4 for the year. According to Midland\u2019s latest research of more than 137 significant residential developments, 22 estates had fallen more than 20% compared to December 2021\u2019s unit rate and compared the latest asking prices from Centaline agency. According to their unit prices, these 22 estates\u2019 had risen about 5.6% to 15.8% compared to the end of 2021.<\/p>\n\n\n\n Seventy-two estates dropped between 10% to 20%, and their updated asking prices were up 4% to 24% at 19 January, according to Centaline Agency.<\/p>\n\n\n\n Thirty-five more estates\u2019 unit prices fell less than 10%, and their latest asking prices were up from 3% to 17%, depending on how much they had sunk in Q4 2022. <\/p>\n\n\n\n Eight estates started their recovery in December 2022, increasing by 0.7% to 17.3%, reflecting the turning point of the \u201cOpen Border\u201d announcement on 29 December. Their asking unit prices were 3.4% to 14.5% higher than at the end of December. <\/p>\n\n\n\n Due to the customs clearance effect in the Year of the Rabbit, the market expects a more significant economic and market recovery, supported by the return of purchasing power. Overall property transactions, coming off a low base, will likely rebound sharply in the Year of the Rabbit, jumping more than 25%, passing the 70,000 mark, and value is expected to reach HK$700 billion in 2023.<\/p>\n\n\n\n The secondary residential market could record more than 50,000 transactions, an increase of 25% compared to the Year of the Tiger\u2019s roughly 37,000. The same will be valid for primary residential transactions, estimated to reach 14,000 to 15,000. Compared to the Year of the Tiger\u2019s roughly 10,000 cases, this would increase by 50%. <\/p>\n\n\n\n Retail consumption, tourism and catering industries, which the epidemic has severely hit in the past three years, are expected to benefit from the vastly increased traffic between mainland China and Hong Kong. <\/p>\n\n\n\n However, it must also be noted that some international banks have lowered their economic growth forecast for the fourth quarter of last year to a negative 1.4%. The economic growth forecast for the first quarter of this year was lowered to 1.4% to reflect weak global demand. <\/p>\n\n\n\n The mainland also needs to face its own financial problems. The stock market needs to be carefully observed, favourable conditions promoted, and those who intend to enter it should avoid being overly optimistic. The US Fed raised the interest rate again in February by 0.25%. The market seems to think the interest hike cycle is ending, with only two further hikes expected. <\/p>\n\n\n\n Hong Kong will announce the 2023-24 Budget on 22 February, which could massively affect the real estate market, especially if the special stamp duty on the residential sector is relaxed. Home buyers, investors and foreign funds will watch the budget closely before making their Q2 plans.<\/p>\n\n\n\n Rabbits are small, with long ears and large, powerful hind legs. Those long ears listen to all around them for clues to make the best choices. Knowledge is our strength, our powerful hind legs that will allow us to jump as high as possible in this new year. We should be like rabbits and consume news daily, paying extra attention to politics, finance, real estate and the latest PRC policies to make the best choices. <\/p>\n\n\n\n Let’s welcome the Year of the Rabbit! To all my readers, Kung Hei Fat Choi.<\/p>\n\n\n\n F<\/strong><\/a>ind or sell properties on Spacious<\/a><\/strong><\/p>\n\n\n\n By Angus Luk<\/p>\n\n\n\n Nov 2021 : Buyers look to the New Territories after Northern Metropolis plan is announced<\/p>\n\n\n\n While the market generally paused for Carrie Lam\u2019s Policy Address on 6 October, the New Territories towns began reaping the benefits of the Northern Metropolis plans. Lam highlighted measures to tackle Hong Kong\u2019s housing and land shortages, outlining the Northern Metropolis development strategy to create more land resources for residential, IT and other uses in the next 20 years. <\/p>\n\n\n\n It is interesting to see how Hong Kong\u2019s real estate market has fared since. In October 2021, Hong Kong recorded 6,238 property registrations, according to data from the Land Registry. This number was down 16% from September\u2019s 7,402. October was the lowest registration number for the past nine months, reflecting investors\u2019 hesitation after the Policy Address. <\/p>\n\n\n\n The total property registration value during the month also fell by 7% to HK$63.162 billion. That figure has fallen for three months, with last month\u2019s figures being the lowest in the past eight months.<\/p>\n\n\n\n In the residential sector, last month’s first-hand private home transaction registration volume fell the most. From late September to early October, the market paused before and after the Policy Address, which led to a decrease in transactions. <\/p>\n\n\n\n As a result, the registration of first-hand private home sales in October fell by 34% month-on-month, with 1,275 transactions recorded. This figure made October the fourth-lowest month this year. However, with many high-priced transactions recorded during the period, the total registered value fell only slightly by 4% at HK$20.304 billion. The top three new developments that attracted buyers\u2019 attention were La Marina<\/a>, Wong Chuk Hang<\/a> (233 transactions), Wetland Seasons Bay 1<\/a>, Tin Shui Wai<\/a> (204 transactions) and LP10<\/a>, LOHAS Park<\/a> (167 transactions).<\/p>\n\n\n\n From mid-September to early October, the second-hand housing market was also affected by the wait-and-see sentiment around the Policy Address, with the added pressure of the holidays and the typhoon resulting in a continued decline in second-hand transactions. In October, registrations for second-hand private home sales fell by 13%, with 3,058 registrations, taking figures to a 14-month low since September 2020. The total value of registrations fell by 10%, for HK$29.477 billion.<\/p>\n\n\n\n Even though the volume of residential transactions have shrunk significantly in the past two months, some estate developments in New Territories North and East saw an upward price adjustment after the Policy Address.<\/p>\n\n\n\n Fanling<\/a><\/strong><\/p>\n\n\n\n By comparing past transactions in the same developments, we see Fanling\u2019s unit rates rose 0.2% to 3.2%. The bump was in developments under 21 years old. Buyers prefer newer developments if they are buying a property that is not close to an MTR station. Therefore, older properties such as those from the \u201880s or \u201890s may not see their prices increase.<\/p>\n\n\n\n Sha Tin<\/a><\/strong><\/p>\n\n\n\n Recently most transactions in Sha Tin rose in value, mainly in traditional developments near the MTR station. Three were more than HK$10 million, buoyed by the Northern Metropolis development strategy. Flats that sell for more than HK$10 million are not \u201cstarter homes\u201d, so buyers need to make a 50% down payment. Furthermore, those buyers won\u2019t get a high ratio mortgage but keep putting their money into the residential markets because they are optimistic about the future.<\/p>\n\n\n\n Tai Po<\/a><\/strong><\/p>\n\n\n\n Geographically, Tai Po is near the Northern Metropolis development, and figures show a 3% to 9% rise in unit prices, higher than Sha Tin and Fanling. Some sales were special units with parking space and a garden, and buyers would struggle to find something similar in the same price range in more urban areas. These luxuries entice buyers to choose flats in the New Territories, with the bonus of larger homes with more privacy. <\/p>\n\n\n\n Tai Wai<\/a><\/strong><\/p>\n\n\n\n The Arles in Tai Wai came onto the market in mid-October. Over the weekend of 16 and 17 October, 450 flats were sold. By the end of the month, 814 of the total 1,335 units had been snapped up. <\/p>\n\n\n\n Overall, the market reacted positively to the Policy Address as uncertainty has cleared. In addition, there are currently no short-term measures to change the problem of insufficient housing supply. We can believe that with the pandemic being stable and the continued improvement of the economy and unemployment rate, the secondary market will rebound. At the same time, commercial, industrial and other properties have also been steady.<\/p>\n\n\n\n F<\/strong><\/a>ind or sell properties on Spacious<\/a><\/strong><\/p>\n\n\n\n By Nigel Smith<\/p>\n\n\n\n Sep 2021\uff1aSentiment may be soft, but it is not all bad news<\/p>\n\n\n\n After weeks of bumper housing sales, market factors, and a story from Reuters news agency, dampened market sentiment just before the Mid-Autumn festival. The report, which the Government swiftly dismissed as a rumour, claimed Beijing had asked a few of Hong Kong\u2019s top home developers to do more to alleviate the city\u2019s housing crisis. This and market factors made for a bumpy ride around Mid-Autumn as prices began to turn. <\/p>\n\n\n\n Many buyers felt that prices might fall further, so they held on for better deals; others on the brink of signing deals might have felt a twinge of uncertainty. Hong Kong\u2019s housing market fell sharply, and we do expect that it will have wiped out the 7% gain it had made since the beginning of the year by the end of the year. <\/p>\n\n\n\n Swift government action and the Real Estate Developers Association saying they had heard nothing of the sort tempered the shock. But, in the exchanges, the message was clear; developers need to do more to fix the city\u2019s housing shortage. And they are more than willing to do so. Some, like New World and Henderson, have already started<\/p>\n\n\n\n In the long term, this is not bad news at all. Having more homeowners in the market will be positive, and there will still be an imbalance between supply and demand, just not one so acute that it cuts large swaths of the population out of the market. Hong Kong\u2019s housing shortage needs attention, and there is a way to make homes more cheaply without lowering the square foot price \u2013 making smaller flats. <\/p>\n\n\n\n If developers choose this route, the entire market should not be too affected. They cannot immediately drop thousands of flats onto the market; those will take time to plan and build.<\/p>\n\n\n\n But people who want to buy now, especially first-time buyers who were ready to make the leap, might be a little glum. There are two ways to mitigate the risk.<\/p>\n\n\n\n It\u2019s worth remembering that the Reuters story was not the sole cause of the downbeat market. While prices had been increasing, the volume of transactions was relatively low, showing that prices were even higher for the few transactions that were taking place. The reboot might hurt now, but the market will come back stronger once it digests the excess.<\/p>\n\n\n\n Let\u2019s see what comes out of that all-important policy address, which might change the playing field.<\/p>\n\n\n\n F<\/strong><\/a>ind or sell properties on Spacious<\/a><\/strong><\/p>\n\n\n\n By Nigel Smith<\/p>\n\n\n\n Aug 2021\uff1aHong Kong\u2019s stamp duties mean buyers and sellers need to be patient<\/p>\n\n\n\n In some places in the world, investing in multiple properties is considered a good thing as it almost guarantees a post-retirement income. In fact, some areas encourage their residents to do just that. Not so in the Hong Kong SAR, though, where space is premium and investors with bottomless pockets could make easy money.<\/p>\n\n\n\n Before 2010, speculators could buy a property and sell it within a week, making HK$100,000 in the process which bumped up the market value.<\/p>\n\n\n\n These conditions left many residents unable to afford homes of their own, caught between earning too much to be eligible for public housing but not enough to be a homeowner. These circumstances have led to considerable disgruntlement among this \u201dsandwich class\u201d and were one of the factors behind recent social unrest.<\/p>\n\n\n\n In response, the government introduced a stamp duty in 2010 to cool the market by controlling resale times. They taxed owners who sold their property within three years, taxed owners who already had a residential property, and taxed non-permanent residents and buyers who used company names.<\/p>\n\n\n\n While the tax does not affect first-time homebuyers who are permanent Hong Kong residents, it can dramatically change the price of a property.<\/p>\n\n\n\n In Hong Kong, there are three categories of stamp duties you need to know about if you are buying or selling property:<\/p>\n\n\n\n 1. Ad Valorem Stamp Duty (AVD) for Residential Property vs Non-Residential Property<\/p>\n\n\n\n 2. Special Stamp Duty (SSD) is paid by buyers, depending on how long they have held the property.<\/p>\n\n\n\n 3. Buyer\u2019s Stamp Duty (BSD) paid by non-Hong Kong Permanent Residents and residential buyers who buy under a company name. <\/p>\n\n\n\n Last month, all residential stamp duties fell, but they had risen by more than 50% year on year in the seven months before. Stamp duty on new homes alone increased by about 66.7% year-on-year in the first seven months.<\/p>\n\n\n\n Buyers and sellers need to bear these extra costs in mind when facing transactions. Nevertheless the market is still rebounding, especially the luxury residential market for homes costing more than HK$20 million.<\/p>\n\n\n\n From May to June this year, developers sold many new flats, most in a good location with MTR access. These were so attractive to buyers that many who already owned one home were willing to pay 15% more in stamp duty. Second-hand flat prices increased rapidly from January to April, and sellers didn\u2019t mind paying the SSD as the value of their homes had grown to offset the cost.<\/p>\n\n\n\n If buyers hold on to their property long enough, they could see an increase in value that will offset the tax and leave them with a modest profit.<\/p>\n\n\n\n F<\/strong><\/a>ind or sell properties on Spacious<\/a><\/strong><\/p>\n\n\n\n By Nigel Smith<\/p>\n\n\n\n July 2021\uff1aGovernment\u2019s focus on public housing puts squeeze on new private stock<\/p>\n\n\n\n We all know what happens when weak supply meets strong demand. And that\u2019s about to happen to Hong Kong\u2019s private residential market. Gradually, supply has come under pressure from natural demand. But, the pandemic has seen construction falter and a new government announcement has further decreased supply.<\/p>\n\n\n\n Projections for the next 10 years show the government\u2019s promised swing towards more public housing will leave a wider gap between supply and demand on the private front. The projected total housing-supply target for the 10-year period from 2021-22 to 2030-31 is 428,000 units (rounded to 430,000 units). This overall supply target has not moved from projections for the previous two years. <\/p>\n\n\n\n But in 2018, the government committed to increasing the supply of public housing, which naturally means fewer new units coming on to the market in the private residential sector. The government has revised the public\/private split of new housing supply from 60:40 to 70:30. Out of the total supply target of 430,000 units in the next 10 years, public housing will get around 301,000 units and the private housing market will only get around 129,000, for an average annual supply of 12,900.<\/p>\n\n\n\n Last year, there were 63,308 property transactions, comprising private and subsidised home sales. We believe only around 12,900 were sales of new private flats, with around almost 31,000 second-hand sales.<\/p>\n\n\n\n Hong Kong\u2019s luxury residential sales have a so far this year \u2013 particularly in homes costing more than HKD20 million. This trend follows the global market which has responded to the maturity of the COVID-19 pandemic one year on, and to the hope brought about by the global vaccination programme. Record-breaking sales figures point to high demand.<\/p>\n\n\n\n The 10-year projection of private housing supply assumes developers will finish properties on time, which as we know often fails to happen. Not only does construction have to be kept on track, but materials must be delivered without supply interruption.<\/p>\n\n\n\n If nothing changes, we can expect private housing prices to be stable in the next five to 10 years overall, but as demand increases, prices will rise.<\/p>\n\n\n\n F<\/strong><\/a>ind or sell properties on Spacious<\/a><\/strong><\/p>\n\n\n\n By Nigel Smith<\/p>\n\n\n\n Getting in on the ground floor of a good property investment could be as simple as knowing where new MTR stations are being built and taking a leap of faith before the details are confirmed.<\/p>\n\n\n\n In 2016, two new urban MTR stations opened which significantly raised property prices in the vicinity – Whampoa and South Horizons Stations. <\/p>\n\n\n\n Whampoa Station opened on 23 October 2016, and before the confirmation of the opening date, residential unit rates were between HK$11,000 and HK$13,000. After the Government announced the actual open date, unit rates began to increase and did so all the way up to the end of 2019, creating a new range of between HK$13,000 and HK$15,000, up 15% to 18%.<\/p>\n\n\n\n Similarly, on 28 December 2016, when South Horizon Station opened and prior to the confirmation of the opening date, unit rates were between HK$12,000 and HK$15,000. Not surprisingly, after the opening date was confirmed, there was a comparable increase in unit rates of HK$14,000 to HK$17,000. So, within the same year (2016), prices increased by 13% to 16%. <\/p>\n\n\n\n Skip forward to 2021, and on 30 May, when it was announced that the Sung Wong Toi station in Kowloon City will open on 27 June 2021, along with the rest of Phase 2 of the Tuen Ma line, we are seeing the same trend occurring.<\/p>\n\n\n\n Looking at the latest transactions and asking prices of the 12 residential developments in Kowloon City closest to the new MTR station, we can see that prior to the confirmation of the opening date, unit rates were on average HK$16,000 to HK$19,000. After the announcement on 30 May, the unit rates jumped to an average range of HK$20,000 to HK$23,000. If you were savvy enough to buy in May, you could have potentially seen your investment increase by over 20% and still see further gains as the year moves forward.<\/p>\n\n\n\n Obviously, timing the sale of a property is everything and the Hong Kong market can be unpredictable, but it pays off to research what is going on in the vicinity of where you wish to invest. The inevitable expansion of the city\u2019s transport nodes to find new space and create convenience is so important to the strategic future of Hong Kong, so investing close to a \u201csoon to be built\u201d MTR station will usually reap the rewards.<\/p>\n\n\n\n Find or sell properties on Spacio<\/strong><\/a>us<\/a><\/strong><\/p>\n\n\n\n If only we had a crystal ball\u2026 who would have guessed that residential sales transactions would have increased by 26% YTD? When comparing the first third of the year (January to April 2021) to the same period in 2020 the increase is even more impressive at 62%. Looking globally, this growth reflects the market\u2019s response to the maturity of COVID-19 one year on as well as the hope brought about by the global vaccination programme. Stepping away from the macro-economic drivers, let\u2019s look at the Hong Kong-specific data in a bit more detail.<\/p>\n\n\n\n <\/p>\n\n\n\n Jan-Apr 2021 vs Jan-Apr 2020 by purchase price<\/strong><\/p>\n\n\n\n
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\n\n\n\nJune 2021: Next stop, Sung Wong Toi!<\/h3>\n\n\n\n
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\n\n\n\nMay 2021: Hong Kong residential market dazzles<\/h3>\n\n\n\n