Hong Kong is Named as the Least Affordable City in the World

Hong Kong has been named the least affordable city in the world for the eighth year running by the US planning consultancy, Demographia Surveying nine leading housing markets around the world, Demographia looked at cities in Singapore, Japan, China, the US and the UK, finding that Hong Kong’s median property prices is 19.4 times higher than the median income.

Property in London is 8.5 times higher than the average income, with property in prime central London costing $2,510 per square foot. The average Hong Kong home costs $3,182 per square foot, which is more than 25% higher than London, and is almost double that of Singapore, where property costs $1,757 per square foot.

Over the past decade, property prices in Hong Kong have increased by 160%, which sees a modest three-bedroom flat cost HK$150 million (US$19 million), and property in super prime locations costing HK$195 million. Colliers International is predicting an increase between 8% and 10% for mass residential property in Hong Kong, and Midland Realty is expecting to see prices for smaller units in the city grow by 15%.

Prices in Hong Kong have been growing considerably and the city’s government is putting in measures to tame the growth. Since 2009, the government has enforced mortgage tightening on eight occasions. However, this did not manage to stabilise or lower property prices in the city. The city of Toronto also tried this method and did see a cooling of its property market.

Hong Kong’s booming property market is not yet described as a bubble, even though the prices are high when compared to historical data, because the market is said to be supported by genuine end-user demand.

As prices in central locations in Hong Kong continue to rise, many residents cannot afford to buy. With stagnant incomes, a Hong Kong resident working as a skilled worker within 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.

Newcomers to the city, such as Stefan Masuhr,can look to purchase property within the booming centre of Hong Kong – or can look to the city’s newly emerging neighbourhoods instead. With more affordable property prices, areas such as Kennedy Town and Sai Ying Pun are fast becoming a popular choice with buyers. The growing popularity of these areas is helped by the recent extension of the train line and a large number of upmarket residential developments have sprung up to meet the demand for property.