Mystery behind the buoyant housing market despite pandemic

April 21, 2021 10:27
Hong Kong housing market stays resilient amid the pandemic, with no lack of prospective buyers wearing masks waiting in line outside developers’ sales offices. Photo: Reuters

A friend who lives in Tseung Kwan O said he received a dozen calls over Easter holidays from property agents. To turn them down, he made up an excuse that his flat would not be available until six months later, but potential buyers said they could wait.

These sorts of aggressive bidding, often seen during the boom time, are not supposed to come in the midst of pandemic when people are still wearing masks.

It was reported that over 1,000 transactions were conducted in Tseung Kwan O, one of the most densely populated districts for young families, in the first quarter. The momentum seems to sustain in April as 300 transactions were closed in the first three weeks.

Why are buyers so impatient? Well, to some Hongkongers, they learnt a painful lesson not to buy on dip during the SARS outbreak 18 years ago.

As evidenced by the local school dropouts in the past year, not a few people left the city to United Kingdom and other countries amid the low political climate. But even that does not appear to hurt the local demand for housing.

This reminds me of the strong rebound of the home market in the early 90s after the brain drain that saw many professionals seeking their new chapter of life in United States, Canada, Australia and United Kingdom.

Some of them came back a few years after, only to find out that home prices have gone much higher in the run up to 1997 changeover. With hindsight, it would have been best to buy property during the bad time.

The strong buying interest can also be explained by the low interest rate. With the low rate environment likely to last at least a few years, investors are seeking better returns from equity and physical assets, while taking advantage of the low cost of gearing up.

Hong Kong is not alone. Toronto, for example, a popular destination for education or retirement among Hong Kong people, also saw property price surged 20 per cent last year despite having experienced a record daily number of covid-19 cases.

A friend in Canada said the price run could continue as a potential uptick in demand from incoming Hong Kong immigrants in summer, assuming they can come for the next school term, has not been reflected.

For the same reason, that is perhaps why the housing market in Tseung Kwan O, and possibly Shatin and Sai Ying Pun, popular residential choices of mainland families with kids studying in Hong Kong, is heating up.

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EJ Insight writer