In January 2018, Hong Kong was named the least affordable city in the world by Demographia, an American planning consultancy. This is the eighth year in a row that the city has taken the top spot on the list, which reviews nine housing markets around the world including China, Singapore, Japan, the US and the UK.
Hong Kong now has an average property price that is 19.4 times higher than the average income, with the average sales price for a property in Hong Kong costing HK$24,900 per square foot, which is equivalent to $3,182. As a comparison, London property prices are 8.5 times the average income, with prime central London properties costing around $2,510.
A three or four-bed apartment in Mid-Levels, Hong Kong, costs around HK$150 million ($19 million) – whilst super-prime properties in the city can reach prices of HK$195m. With prices as they are, a skilled worker with a position in the service sector would need to save their entire salary for 20 years in order to buy a 650 square foot flat in the centre of the city.
As real incomes have remained unchanged in Hong Kong for several years, the high prices of property makes living in the city even less affordable, and as a result huge numbers of people participated in a 79-day sit-in in protest in 2014. UBS also reported in September that the Hong Kong property market is heading towards a property bubble, though this is disputed by analysts as the increasing prices are backed up with genuine end user demand.
The Hong Kong government’s efforts have been unsuccessful so far, despite putting mortgage tightening into action on eight occasions since 2009. However, rather than supressing property prices, these measures may in fact have pushed the prices further up. Home prices increased consistently over the 23 months prior to April 2018, the longest growth period for property in the last 25 years.
Newcomers to Hong Kong, such as Stefan Masuhr, are faced with the choice of living in a small property with a very high price per square foot in the centre of the city, or moving further out of the centre to one of the up-and-coming areas.
Emerging neighbourhoods, including Sai Ying Pun and Kennedy Town, used to be blue-collar locations. However, they have quickly become gentrified thanks to the large number of new upmarket properties and residential tower developments.