Twenty years after its handover to China, Hong Kong has become one of the most expensive and least affordable places on the planet.
With a more than 20 percent surge in home prices in the past year, people in the city are finding that even a very tiny apartment would cost something north of a million Hong Kong dollars.
It is getting harder to find new property listings at below HK$10,000 per square foot.
Now, what do we tell those seeking a roof over their head, especially the youngsters who earn just about 10K as they start off their careers?
The mathematics is really daunting. A month’s salary will fetch you just one square foot. So if you work 10 years and save all the money, all you will be able to afford is a lousy 120-square-foot unit.
If you have no financial help from parents, it may take you 40 years before you’ll be in a position to buy a 500-square-foot home.
And even this could be a stretch as we know that property prices are climbing much faster than personal incomes.
Home prices in the city hit new highs for the sixth consecutive month, as developers, encouraged by strong response to new project launches, have resorted to very aggressive pricing.
According to the index compiled by the Rating and Valuation Department, home prices are up 20 percent compared to the year-ago level, having risen for 13 straight months.
Interestingly, the biggest price gains were for the units that were very small, including those in remote locations.
A 430-square-foot unit in New Territories, for instance, had a price tag of HK$4.92 million, up 25.8 percent from a year ago, according to the data.
Likewise, similar units were sold for HK$5.32 million on average in Kowloon, and for HK$6.44 million on Hong Kong Island.
According to a survey carried out by a local newspaper, less than 10 percent of the 128 major housing estates are now trading at below HK$10,000 per square foot.
A year ago, about one in four housing estates were below the five-digit dollar level.
Sea Crest Villa, one of the largest housing estates in Sham Tseng, has seen the value of its units recover to the launch price levels of 20 years ago.
Authorities have tightened mortgage rules in a bid to cool the market, but the measures haven’t proved effective.
There is some panic buying going on as people believe prices will rise even further.
And developers share the sentiment, prompting them to put in aggressive bids for land plots, adding fuel to the already red-hot market.
Nan Fung Development has just bagged a commercial site in Kai Tak for HK$24.6 billion, dwarfing a previous record deal of HK$23.2 billion of Henderson Land for a Murray Road property in Central.
Hong Kong’s housing crisis has its roots going back to 50 years, but the problem worsened in the past decade.
A low-interest-rate environment and speculative purchases by wealthy mainlanders, who saw Hong Kong property as a safe haven amid economic uncertainties back home, have distorted the market.
Thus, we have seen a crazy surge of some 137 percent in home prices since the 2008 global financial crisis.
While some people had fun as they rode the market and reaped huge gains, it has been grim news for most ordinary Hong Kong citizens.
And the situation threatens to get even worse.
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