Overview of the Hong Kong Real Estate Market

Posted on 27 October, 2021 | By Property852

Are you thinking about making a move to Hong Kong or investing in Hong Kong real estate? Here's a quick overview of the real estate market in Hong Kong.

If you're living in a major city like London or New York, you know all about sky-high housing prices. The real estate market is brutal for buyers and renters right now and doesn't show signs of letting up anytime soon. 

However, this is especially true when it comes to Hong Kong real estate. With rents higher than any of the world's major cities, it's difficult to even consider houses or apartments in Hong Kong. 

Whether you're considering a move or want to invest in real estate, we've assembled a complete guide to Hong Kong real estate. 

It's Cramped 

Unless you have lots of money to throw around, don't expect a luxury pad if you're looking at houses in Hong Kong. The vast majority of Hong Kong residents—90% of them, in fact—live in under 700 square feet. 

If you have a lot of possessions that you aren't willing to get rid of, a big family, or simply like your space, Hong Kong might not be the place for you. 

Hong Kong has a population of almost 7.5 million, and this means living situations for everyone are cramped. It's a classic case of too many people and too little space. 

Because of high demand, apartments in Hong Kong are small. The smaller the living quarters, the more people can fit into a given building. This provides larger revenue for landlords or homeowners.

What Can You Afford?

The key to understanding the real estate market in Hong Kong is the class divide. Some of the wealthiest people in the world live in Hong Kong.

According to some experts, Hong Kong is the least affordable city in the world. Given that this includes cities with famously astronomical rent, like New York or San Francisco, this is a deterrent to someone with a smaller income. 

As a city, Hong Kong is facing a lot of issues. Economic inequality, discrimination, and the severe housing crisis are the tip of the iceberg. 

Some statistics help put glaring class differences in perspective. Half of Hong Kong's apartments usually go for around $2,550 a month. If wages kept up with rent increases, this might not be as much of a problem. 

As it is, $2,550 represents 122% of an average individual's monthly wages. In many cases, a square foot of property costs $3,200. 

Hong Kong has held the world record for the most expensive property for a decade now. At this point, the housing crisis is so severe that it will take drastic steps to reverse it. 

Of course, this isn't a big issue for the wealthy. Some of the world's richest people in Hong Kong made their investments in real estate early. They can afford the 'average' home that goes for 1.3 million dollars. 

As the housing crisis continues to deteriorate, the exorbitant rents that Hong Kong houses and apartments command continue to line the pockets of the wealthy. If you're financially successful enough to invest in Hong Kong real estate, you'll make your money back with interest. 

What is the Real Estate Market Like for Everyone Else?

In this case, 'everyone else' includes most of Hong Kong's population. The lack of a strong middle class has done nothing but contribute to Hong Kong's major issues over the years, so a 'median income' is difficult to establish given the extreme wealth disparities.

What happens if you're not one of Hong Kong's millionaires? If you are planning a move to this city, ensure that you have multiple safety nets and savings accounts in place. 

Hundreds of thousands of people in Hong Kong are homeless because of the exorbitant housing prices and the difficulty for residents to save up a safety net. However, homelessness isn't the only issue. 

Coffin cubicles are another issue in this city. Some residents pay $180 a month to live in a tiny subdivided flat. They share basic facilities, like a stove or a bathtub, with many other residents in the same apartment building. 

They're called coffin cubicles because they're often 20 square feet or less, stacked on top of each other, and composed of wire mesh rather than any sturdy building materials.

In many cases, it's impossible for a fully grown adult to lie down and stretch out inside this space. As expected, these coffin cubicles are in violation of human rights, safety violations, and basic decency. 

Studies have been done to prove these living situations negatively impact both the mental and physical health of their residents. This is the reality of real estate in Hong Kong at this time, given the overpopulation and under housing situation.

Invest in Public Housing 

If you're considering making an investment, even given the nature of Hong Kong home prices, consider investing in public housing. 

In Hong Kong, there was a major financial crisis in 1997. At this time, the government stopped constructing public housing. This is a major issue and has directly contributed to the current housing crisis.

Now, there's a major demand for it. In fact, application numbers are 141 times higher than the actual supply. The given wait time for any one of these units is between 5 and 6 years. 

Of course, that's far too long to wait if you need housing assistance. Part of the issue is exacerbated by strict land zoning rules, which is important to consider if you want to buy or invest in Hong Kong real estate. All of Hong Kong's land is government-owned, and only 7% of it is up for housing. 

It costs a lot for developers to pay the government's premiums. Then, those same developers jack up housing prices in order to recoup their expenses. This creates a vicious cycle and a huge need for public housing.

That's why investing in Hong Kong real estate is such a gold mine. There's an intense need for houses in Hong Kong, and capitalizing on this supply-demand chain will produce tremendous rewards.

Hong Kong Real Estate

If you're looking to invest in the Hong Kong real estate market, congratulations. Your investment is sure to reap benefits for years to come. 

However, there are challenges to renting property in Hong Kong. That's why we connect landlords and potential tenants directly. 

If you're interested in garnering potential tenants for your property, contact us today! We're here to help.

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