Hong Kong homes are now the least affordable in the world after cooling measures implemented by the government fail to slow price growth.
- Despite the implementation of numerous cooling measures, Hong Kong real estate prices continue to rise
- The Hong Kong housing market is now the least affordable in the world
- As property becomes increasingly unaffordable, more Hong Kong’s residents are finding themselves forced to live in ‘coffin homes’
The challenge of reducing real estate prices in the world’s least affordable city, Hong Kong, is proving to be more difficult than first anticipated, according to Hong Kong’s new Chief Executive Carrie Lam.
Property curbs implemented with the view to cooling the housing market have done little to tame soaring prices. In fact, they have actually contributed to a rise in the number of people living in ‘coffin homes’ and tiny apartments.
The cooling measures, introduced by the government, included a scrapping of the sliding rule on stamp duty, meaning those who aren’t first-time home buyers now have to pay 15% tax, and foreign buyers 30%. This came on top of existing strict buying provisions which include a maximum loan-to-value ratio of 50% on properties worth more than $HK10 million ($1.69 million).
Despite these measures, property prices have continued to rise, thanks to an abundance of cheap mortgages and the amount of liquidity circulating within Hong Kong’s banking system.
Chinese mainland buyers haven’t been deterred either, spending $3.8 billion on residential plots in the city since January, snapping up 57% of the gross floor area sold by the government this year. With many mainland firms outbidding Hong Kong’s tycoons in land sales, a further hike in prices is expected once those properties are developed.