Posted on 23 January, 2020 | By Property852
Hong Kong apartments are still very costly despite the protests. A study shows that it takes a family to save for 20.8 years to buy a house in Hong Kong. The figure was 20.9 in 2019 and hence there's not much change.
The marginal drop isn't likely to affect the ranking in unaffordability index as it's nearly twice that for the competing cities like Vancouver and Sydney.
For the 10th year in a row, Hong Kong apartments have secured the top position in this infamous Index. Despite the social and economical unrest in 2019, the housing market didn't fall much. Hong Kong is still the most expensive city in the world for buying a house and the situation isn't likely to change in the near future.
As per the latest International report on Housing Affordability, published by Demographia, a family needs to save for 20.8 years to be able to afford a Hong Kong apartment. Demographia.com compares 92 housing markets from all over the world after calculating the median scores for each. There's a nominal decrease from its value of 20.9 in 2018.
Vancouver, with a score of 11.9 secured the second spot, while Sydney was third with 11. Melbourne and Los Angeles were placed at fourth and fifth places with 9.5 and 9 respectively. The score is calculated by simply dividing the median price of a house by the median family income. Demographia stated that the calculations were made up to third quarter of 2019.
In their statement released on Monday, Demographia said that some of the most expensive housing markets have moderated last year. The fall was, however, inadequate to make any substantial mark as markets like Hong Kong still remain highly unaffordable. Although the city was stuck by one of the largest anti-government turmoils in recent past, the disparity continues.
Midland Realty chief analyst, Buggle Lau Kai-fai said that the low supply/demand ratio hasn't allowed Hong Kong apartments prices to fall much. The situation isn't likely to improve this year also because of slow sales in land market.
During the lean period, a few of the biggest real estate developers like Sun Hung Kai Properties and CK Assets offered new houses at discounted prices. The government also reduced the mortgage rates to encourage new buyers. Sub Hung Kai, Wheelock Properties, Henderson Land and a few others have even offered their lands on loan at a token amount to reduce the shortage of houses. All these steps were taken to alleviate the rising public dissatisfaction.
The political and economic crisis in Hong Kong was the worst in decades and jolted the city's economy. Ricacorp Properties released an analysis which brought out that home prices in the city dropped by a quarter in 2019. Discounts were offered by many housing developers to ease out the pressure and limit the losses.
Housing analysts have claimed that there's a likelihood of further fall by 20% in 2020. However, the analysts of JPMorgan Chase say that the fall in prices, if any, won't last long.
Buggle Lau, the chief analyst at Midland Realty stated that the prices may decline in the two quarters, but the effect won't be much. The prices might infact remain steady, if the social unrest settles down. By the end of the year, we may even witness an increase in the rates.
31 cities in the world, including Auckland, San Francisco, Greater London and Toronto, which scored over 5.1 in the unaffordability index have been categorised as "Severely Unaffordable" by Demographia. Next category is "Seriously Unaffordable" including Singapore with 4.6 as its score. An interesting fact is that the 10 most affordable housing markets are all in the US, with Rochester leading. Oklahoma City and Cleveland are close on their heels.