Potential pent-up demand based on a rate of homeownership that has been shrinking since 2011 may lend support to Hong Kong’s mass residential market.
The rate stood at 66 percent last year, the lowest since 1989, as potential buyers delayed home purchases given the surge in values since 2012.
An increase in the ratio back to 70 percent, the 10-year average from 2002 to 2011, would translate into potential pent-up demand for 53,000 units.
The widening gap between the number of new households formed annually and the number of marriages in Hong Kong also suggests the potential for housing demand to recover.
The average annual number of marriages in Hong Kong from 2011 to 2015 was about 56,000, nearly double the number of new households formed during the period.
Some prospective buyers will probably purchase homes when they become more affordable.
The recent easing of mortgage rates, coupled with weakness in home prices, may attract some end-user demand, mainly for mass property units.
The mass market is also underpinned by a rising number of small households.
The total number of households with two members has increased by 65,900 over the past three years, while those with only one member rose by 34,300.
The number of households with three or more members dropped by 2,600.
The views expressed in this article are those of Patrick Wong, a property analyst at Bloomberg Intelligence.
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