Hong Kong records highest rent ever in the second quarter
Rents for a private flat rose 15 straight months to HK$35.10 per square foot in the second quarter
Hong Kong’s residential market continues to be red hot as rents for private flats hit another new high in the second quarter this year.
Average cost for renting a second-hand flat rose as much as 2.9 per cent on quarter to HK$35.10 per square foot during the April to June period, surpassing the previous high of HK$34.10 per sq ft in the first three months, according to data from Centaline Property Agency. This brings the asking rent for a typical 450 sq ft flat in the city to HK$15,800 per month.
The figure also marks the 15 consecutive month of growth in Asia’s most expensive city to rent a flat.
“As global trade recovered, first-quarter economic growth in Hong Kong was very strong. GDP in the first quarter of 2017 was 4.3 per cent, which is the fastest growth pace since the 5.1-per cent expansion in the second quarter of 2011,” said Wong Leung-sing, associate director of research at Centaline Property Agency.
“Economic growth comes with increased salary, so people can afford higher rent.”
Agents say the traditional peak season which started from May has added fuel to the fire as local families rush to secure a unit in elite school districts during summer, and university students and newly-arrived expats search for flats to rent.
The peak season in the summer is expected to extend to the third quarter, but growth may slow in the fourth quarter, the traditional low season, Wong said.
Centaline expects rents to grow another 5 per cent in the second half of 2017.
In the first half of 2017, average monthly rent for a private flat surged 5.4 per cent to HK$35.10 per sq ft, up from HK$33.30 per sq ft in the second half of 2016. It had cumulatively picked up 12.5 per cent since the first half of 2016, Centaline said.
But Elysia Tse, head of research and strategy for Asia-Pacific at LaSalle Investment Management，said demand for luxury rental apartments had weakened as many expats had their housing allowances cut by their employers, and vacancy was rising.
The performance of the mass market would vary by location, she added.
According to Wong, South Horizon in Ap Lei Chau on Hong Kong island and Whampoa Garden in Hung Hom, Kowloon, recorded the greatest rental growth in the first six months. The two properties saw their rental prices rose 12.7 per cent and 12.4 per cent respectively, which were much higher than the average 5.4 per cent, thanks to the opening of new subway stations nearby.
“As Hong Kong’s rental market remains near peak, we don’t see strong growth in the short term,” added Tse, who also forecast the near-term outlook for Asia-Pacific real estate to remain steady.