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Hong Kong Housing Market In Turmoil As Prices Plummet, Rents Soar

Hong Kong housing

The Hong Kong housing market is in a state of upheaval, with home prices plunging to their lowest levels in nearly a decade even as rents continue to skyrocket, according to government data released on Tuesday.

Private residential prices in the Asian financial hub dropped 1.67% month-on-month and an eye-watering 12.5% year-over-year in September, reaching their lowest point since August 2016, the Rating and Valuation Department reported.

Meanwhile, rents have now risen for seven consecutive months, hitting a five-year high, as the city grapples with a widening affordability crisis.

“Yield-seeking investors may be a demand driver entering the residential market as residential prices reached a relatively low level, coupled with expected lower financing costs going forward,” said Eddie Kwok of real estate firm CBRE Hong Kong.

Kwok suggested that recent policy moves by the government, such as adjustments to mortgage loan-to-value ratios, have helped stabilize prices slightly in the past two weeks. But he believes prices are likely to “bottom out soon” as these investors look to capitalize on the slump.

At the same time, Kwok warned that rents, which were up 5.8% year-over-year in September, are likely to continue rising, though perhaps at a more moderate pace now that the influx of overseas students for the academic year has subsided.

The diverging trends in the Hong Kong housing market underscore the deep affordability challenges facing the city, which has long been ranked as the world’s most unaffordable place to live. The plunge in home prices may provide some relief for potential buyers, but the ongoing surge in rents means the dream of homeownership remains out of reach for many.