At a time when China is implementing ‘warming’ measures Hong Kong is thinking of more cooling measures. Some countries are feeling the effects of cooling measures implemented earlier including Singapore and Malaysia and the developers have started to ask that these cooling measures be relaxed. Latest one would be Singapore where its developers asked for ‘help’ in the luxury segment where prices have been falling. One country is a huge exception. Hong Kong is continuing its cooling measure. Hong Kong’s latest measure is needed to cool down one of the most expensive real estate markets in the world. The home prices in Hong Kong rose to record high last year due to very strong local demand as well as the very tight supply. Since 2012, it has risen 35 percent. Thus, double digit growth every year. Read here: Already MOST unaffordable but prices will continue rising?
Latest measures include reducing the amount that home buyers can borrow as well as capping the amount of debt that they can assume. The amount they can borrow is now 60% and if you are buying a second-home, the debt servicing ratio is now lowered to 40%. This is a very tough measure and if implemented today in Singapore or Malaysia meant the end of property investment for many people. From 2012 till to date, prices in Hong Kong have risen 35%. In other words, double digits every year till end of 2014. The household debt to GDP has risen to a ratio of 64%. High but still lower than Singapore and Malaysia. Singapore is at 76.3% while Malaysia’s at 86.8% to GDP.
Hong Kong is a small city state, just like Singapore. The difference is that Hong Kong has over 2 million more population. Now do you know why the shortage of housing in Hong Kong is worse? Do not forget the fact that Hong Kong property market is also attractive to many mainland Chinese investors. Hong Kong is bigger, slightly over 1,000 sq km while Singapore is 716 sq km. Many years ago, I went to Hong Kong and was driven around by my friend who is a Global Staffing Director for an international MNC. His home? 550sf. When he got to know that my condo then was 1,258sf, he said, it’s impossible to buy such size in Hong Kong. I did not tell him that today my condo is over 1,700sf. 🙂 I seriously do not think Malaysian property prices would be anywhere near Hong Kong anytime soon. Mainly because we have more land and can always build further, as long as we have MRT. I think in this aspect, we are lucky. Let’s hope the Hong Kong administration is able to build more affordable homes then for Hong Kong people’s sake. Happy reading.
written on 2 March 2015
Next suggested article: Roof over your head and ever smaller sizes? Hmm.
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