16 November 2018
The flat at Fung Tak Estate in Wong Tai Sin fetched a per square foot price of HK$15,500. Photo: HKEJ
The flat at Fung Tak Estate in Wong Tai Sin fetched a per square foot price of HK$15,500. Photo: HKEJ

Public housing units fetch higher prices than private flats

Transaction price records for public housing units have been broken twice this week, with the per square foot price of units at King Lam Estate and Fung Tak Estate having surged above HK$15,500, the Hong Kong Economic Journal reports.

The King Lam Estate in Tseung Kwan O broke the record for the most expensive public housing unit, surpassing the rates at private residential flats in the district.

However, the record was quickly replaced by Fung Tak Estate in Wong Tai Sin in the same week with a per square foot price of HK$15,500.

The Housing Authority sold the flats under the Interim Scheme of Extending the Home Ownership Scheme, in which previously owned units are sold in the secondary market. 

Fullmark Property Agency branch manager Chan Shek-kam told HKEJ that the flat in Fung Tak Estate is on the lower floors with a net usable area of 126 sq. ft.

Hong Kong Property Services’ Lok Kai-sang said private residential units such as those at Tropicana Gardens in the same district are asking for HK$11,700 per sq. ft., meaning the price at Fung Tak Estate is at least 32.3 percent higher.

Fullmark’s Chan said Fung Take Estate has always been a popular choice with investors as the lump sum is smaller. By renting out a flat at around HK$7,000 to HK$8,000 per month, buyers can obtain a yield of 4.6 to 4.9 percent per year, which is quite attractive.

According to data from the Land Registry, the previous owner bought the flat in 1999 at HK$96,900 with a down payment of only HK$4,845. However, the owner obtained mortgage for the flat on four occasions during 2013 to 2015, drawing out a combined loan of HK$890,000 at staggering interest rates between 25.2 percent and 42.08 percent, Apple Daily reported.

According to data from the Rating and Valuation Department, the King Lam Estate flat is on the 28th floor with a gross saleable area of 153 sq. ft. The original owner of the unit bought the property at a first-hand price of HK$138,500 in 2013.

Sources said the new owner plans to rent out the flat. With an average rental income of HK$7,000 to HK$8,000 a month, the yield would be around 3.6 to 4.1 percent.

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