As the Union Jack fluttered over Hong Kong’s Victoria Harbor for the last time on June 30, 1997, home prices were hovering near record highs and sellout crowds at new projects were the norm.
Twenty years on, property price have hit fresh records and buyers are still thronging to buy new apartments. This time around, the boom has been accompanied by demand from another source: mainland developers.
Chinese companies have dominated Hong Kong’s land sales this year, adding to a spate of acquisitions since the beginning of 2016. HNA Group, the firm led by tycoon Chen Feng, has been among the splashiest of them, splurging on residential property sites near Hong Kong’s old airport. Mainland companies have rapidly grown more active in recent years, after being virtually absent from the market prior to 2011, according to data from CIMB Securities Ltd.
Record sums paid by developers at land auctions could translate into even higher home prices down the road in a city that is already the least affordable in the world. Home prices have soared 76 percent since the previous market peak in 1997, according to data from Jones Lang LaSalle Inc.
For people at the lower end of the income ladder, buying a home can be a daunting challenge. It would take more than eighty years for a person making the median monthly income of HKD15,000 to pay for a 500 square-foot apartment on Hong Kong island, provided they earmark half of their monthly income for home payments, according to Bloomberg calculations based on data from the Census and Statistics Department.
The ever-escalating property market has posed a headache for the city’s leaders and prompted warnings from Hong Kong’s de facto central bank. The Hong Kong Monetary Authority tightened property lending twice last month as it seeks to rein in risks. Bloomberg
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