Expatriates buying as rents climb
Falling mortgage costs boost growing trend to own homes in HK
A growing number of young middle-income expatriates are being lured into buying units in mass residential properties or old apartment blocks after years of renting their homes.
Helping to drive the new trend are expectations that rents could rise about 50 per cent as leases fall due for renewal during the year, property agents say. In fact, rents had already risen in the past few months as home prices increased, they said.
'The rent for a 747 square foot unit in Fortress Garden was HK$12,000 last year,' said Yue Kit-man, a manager at Ricacorp Properties' Tin Hau branch. 'But today, you have to pay HK$18,000 to HK$20,000 to rent a unit of the same size.'
The upward pressure on rents had combined with falling interest rates to convince first-time buyers to shrug off concerns the United States credit crunch might weaken home-buying sentiment, said agents.
And if prices were to fall, most of these buyers said they would hold on to their units for the long haul, the agents said. Hong Kong banks last week cut their prime lending rates 50 basis points to between 5.25 per cent and 5.5 per cent.
As nine out of 10 home lending rates are priced at a discount of more than 2.5 per cent to these best lending rates, most mortgage rates have fallen to fresh lows of between 2 per cent and 2.5 per cent for the year, triggering a surge in demand for home loans.
The latest Hong Kong Monetary Authority data shows mortgage loans approved in January were up almost 30 per cent to HK$29.6 billion - HK$23.7 billion of which was to fund deals in the secondary market.
'My housing allowance now almost covers the monthly mortgage instalment,' said Sybil Lee, a Taiwanese air hostess who moved to Hong Kong 13 years ago.
In November last year, Ms Lee bought a 505 sqft, 20-year-old flat in Kennedy Town, Western District, for HK$2.3 million. Her monthly mortgage payment was only about HK$7,000, as she took out a home loan of 30 per cent of the sale price.
That outcome compared with her previous HK$6,000 monthly rent for a 500 sqft flat and convinced her that now was the right time to own a property in Hong Kong. 'I was fed up with renting for so many years,' she said.
Another expatriate turned Hong Kong homeowner is Duc Luu, an American-Vietnamese who in July last year bought a 1,000 sq ft flat in a 15-year-old block on Hollywood Road for HK$3.4 million.
'I was vacating my rental flat and needed a place. I figured out that rising rents made it cheaper to buy,' said Mr Luu, who runs his own consultancy firm in Hong Kong.
The Hollywood Road flat is his first property investment after seven years of living in a shared rental flat that cost HK$15,000 a month, and Mr Luu notes with satisfaction that since he bought his unit, a flat in the same building has changed hands for HK$4.2 million - a premium of about 23 per cent to what he had paid. 'But I have no plans to sell it now,' he said.
Eva Chung Wai-yee, a senior manager at Centaline Property Agency's Tung Chung branch, said a growing number of expatriates including pilots and air hostesses were now looking for flats in the area. Most were end-users rather than investors.
A South Korean air hostess paid HK$2.1 million recently for a 747 sqft unit at La Rossa and an Australian pilot bought a 1,006 sqft flat for HK$3.95 million, she said.
Ross Jolliffe, an executive at the Hong Kong office of an international manufacturing firm, bought a 1,100 sq ft flat in Pok Fu Lam for HK$6.8 million in April last year. The building was built in 1973.
'I had been renting for 10 years and decided why keep paying more as rents rise. I thought it was time to buy property after I got married last year,' he said. 'Before, when I was single, I did not know how long I would stay in Hong Kong.'
Now, since prices had edged up after he bought the flat, Mr Jolliffe said he had considered realising his gains by selling his Pok Fu Lam flat and buying a bigger one in Mid-Levels. But he would now wait to see if prices of larger luxury units would decline due to the US credit crisis.
Asking prices for flats larger than 1,500 sqft on Robinson Road were about HK$14 million, he noted. 'I think property prices for bigger flats are crazy.'
The Capitol, a residential project being developed by Cheung Kong (Holdings) in Tseung Kwan O, also attracted Italian, Indian, Korean and American buyers when it was offered for pre-sale early this month.
Estate agents said while some expatriates were first-time homebuyers, an Italian veteran investor had snapped up three units for long-term investment.
Benny Sze Hung-bo, an assistant general manager at Midland Realty's Taikoo Shing branch, said a Korean buyer paid HK$11,544 per square foot or HK$14.28 million recently for a 1,237 sqft flat in Taikoo Shing, a post-1997 record price for the estate.
