Small and mid-sized rents to increase
Rents for small- and medium-sized homes are expected to rise further in the second quarter after climbing 0.8 per cent in the first quarter, says realtor Ricacorp Properties.
'Home prices on the secondary market rose sharply in the first quarter,' said Patrick Chow Moon-kit, Ricacorp's head of research. 'Some homebuyers were unable to buy a flat as a result, so they retreated to the rental market.
'Also, some flat owners who recently sold their homes chose to rent and wait for the opportunity to enter the market. Therefore demand for rental homes has increased significantly,' he said.
Some flat owners also wanted to sell their properties when prices remain high, so the supply of rental flats had declined, Chow said.
Consequently, the trend of falling residential rents ended in the first quarter, which saw rents rise 0.8 per cent from the final quarter of last year.
Residential rents in Kowloon rose the most in the city, with a cost increase of 1.2 per cent to an average of HK$21.81 per sq ft a month at 21 private housing estates Ricacorp monitored.
On Hong Kong Island, residential rents at nine housing estates Ricacorp surveyed rose 1.1 per cent to HK$26.58 per sq ft in the first three months of this year.
At Mei Foo Sun Chuen, an estate favoured by investors, rents climbed 10.1 per cent to HK$18.50 per sq ft last month, from HK$16.80 at the end of last year.
However, average monthly residential rents in the New Territories edged up just 0.4 per cent to HK$17.34 per sq ft.
Since secondary home prices have continued to rise, Chow said homebuyers would increasingly look for properties to rent than to buy, while some flat owners would seek to sell their rental properties.
He expects rents to increase by 2 to 3 per cent in the second quarter of this year.