Hong Kong has the “least affordable” home prices in the world, not only ranking the worst for the ninth straight year but also setting a new record, according to an annual survey.
The 15th Annual Demographia International Housing Affordability Survey (2019), conducted by urban planning policy consultancy Demographia in the third quarter last year, covered 309 cities in eight countries, including China, the United States, Australia, the United Kingdom, Canada, Singapore, New Zealand and Ireland. Hong Kong was the only Chinese city in the survey.
The results, unveiled on Monday, showed that the median multiple, or the ratio of the median property price to the median household income, was 20.9 times in Hong Kong, with the home price at HK$7.169 million and the household income at HK$343,000.
That means that it will take an average household 20.9 years to be able to afford an apartment in Hong Kong if there were no other expenses, up from 19.4 years in the previous year and the highest level ever recorded since the survey began in 2005.
By comparison, the multiple for Vancouver, which ranked second in the latest survey, was 12.6 years, and that for third-place Sydney was as 11.7 years.
In fact, eight of the top 10 cities saw their housing affordability improve, except Hong Kong and Auckland, whose multiple rose to nine from 8.8 years.
Based on Demographia’s definition, a city with a median multiple of 5.1 or above is considered “severely unaffordable”.
Demographia said home prices in Hong Kong may witness a decline in home prices this year, which could be 15 to 25 percent according to some experts.
But despite the expected downward adjustment, buying a home in the city would still be a very difficult thing to do, the Hong Kong Economic Journal reported.
Simon Lee Siu-po, a senior lecturer at the School of Accountancy of the Chinese University of Hong Kong, believes that Hong Kong will most likely continue to see home prices rising as many of the city’s advantages – leading competitiveness, stable environment, ample job opportunities, low unemployment rate and no severe natural disasters – will keep luring foreigners to come to work and buy properties in the city.
As such, the government needs to be proactive in terms of interfering in the property market, Lee said.
Professor Terence Chong Tai-leung, executive director of Lau Chor Tak Institute of Global Economics and Finance at the university, urged the government to learn from Singapore and offer as many public housing units as possible to meet growing public needs.
Chong said that since it is impossible for the government to push down home prices by 50 to 60 percent without affecting the economy, increasing the supply of public housing is the only way to ease housing woes.
Letting prices of private homes go unchecked is OK as long as there is abundant amount of public housing offered in the market.
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