Real Estate

Hong Kong homes remain most unaffordable in world for 14th year: research

Hong Kong has retained its dubious distinction as the world’s most unaffordable property market for the 14th straight year, as the average home costs more than the average family earns in more than a decade and a half, according to the 2024 edition of the Demographia International Housing Affordability report.

To be exact, the average family would have to bank its entire income for 16.7 years to amass the average selling price of a home in the city. The span is down from last year’s 18.8 years and represents a further improvement from 20.8 years in pre-pandemic 2019, as home prices have declined and incomes have risen, the report said.

The ranking comes as China’s central government has given Hong Kong a clear mandate to improve housing affordability and increase home sizes, which are among the smallest in the world, the report said. Hong Kong also has the lowest home ownership rate in the study at 51 per cent, while Singapore’s is the highest at 88 per cent, the report said.

Hong Kong’s lived-in home prices climbed 271.7 per cent from 2009 to an all-time peak in September 2021, according to a government index.

The city has ranked as the world’s most unaffordable housing market since 2011 when it was first included in the think tank’s survey, which started in 2005. The 2024 edition provides ratings for the third quarter of 2023 for 94 major metropolitan areas around the world.

The years-to-purchase number Demographia uses is the so-called median multiple, a price-to-income ratio that simply divides the median home price by the median annual household income.

Sydney ranks as the second most unaffordable market, with a multiple of 13.8, followed by Vancouver at 12.3.

In April, the second month after the Hong Kong government dropped a series of cooling measures, the official price index for secondary homes inched up 0.3 per cent to 308.7, the highest since December when it stood at 311.3, according to the Rating and Valuation Department. However, prices are still down 12.8 per cent year on year, and the gauge has dropped 0.83 per cent so far this year.

The first-hand property market is expected to supply about 112,000 new flats in the next three to four years, according to a Housing Bureau estimate at the end of March – marking the second straight quarter where the number hit a record high.

Two major government initiatives could add substantially to Hong Kong’s housing stock.

Buildings in Shenzhen loom beyond farmland in the Lok Ma Chau area of Hong Kong, site of the future Northern Metropolis project, on October 11, 2021. Photo: Bloomberg
The Northern Metropolis, near Shenzhen, is expected to generate more than 900,000 new housing units over the next two decades, with 40 per cent slated for completion by 2032. The government told lawmakers last month the initial estimated cost of the 30,000-hectare (74,000-acre) project is HK$224 billion (US$28.7 billion).
Last month, state-owned mainland conglomerate China Merchants Shekou Group formed a partnership with Hong Kong-based New World Development to jointly develop a mixed-use project in the Northern Metropolis, with the residential component set to provide some 2,000 flats.
The other large initiative is Lantau Tomorrow Vision, a HK$624 billion plan that is expected to yield 200,000 housing units on human-created islands off Lantau Island near Hong Kong International Airport.


Business Asia
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