Nearly half of Hong Kong flats rent for US$2,550 a month – 70 per cent of median household income
Monthly rents could jump 10 per cent this year, making affordable housing even scarcer
Candy Lau knew she would have to pay high rent for her new walk-up studio in Hong Kong. But she was not expecting roommates – a bunch of cockroaches.
“I came to realise that the housing market is expensive and I cannot be that demanding,” said Lau, a 28-year-old account executive. “I had to be flexible with my criteria and budget.”
Lau felt she needed to lower her expectations after a two-month flat hunt in Hong Kong, where nearly 44 per cent of rentals now cost more than HK$20,000 (US$2,550) a month, according to a new report by Midland Realty.
In comparison, the median income for the first quarter this year for a household in the city is HK$28,100, and HK$16,400 for an individual. So nearly half of flats are renting for 70 per cent of the city’s average monthly household income, or 122 per cent of the average individual’s salary.
Cockroaches just felt like part of the deal to Lau, who got off comparatively easily by paying about one-third of her salary – HK$9,000 a month – for her unfurnished 250 sq ft studio, which is on the fourth floor of an old building in North Point.
Rents have been climbing in Hong Kong, rising 3.5 per cent in the first half of the year, according to the city’s Rating and Valuation Department. The latest data from Midland shows that the average monthly rent in July alone jumped another 1.1 per cent to HK$38.15 per square foot.
And rents were likely to keep going up, said Colliers International Hong Kong, which expected an 8 per cent to 10 per cent jump for the full year.
“Tenants who aim for flats with a lower monthly rent often need to settle for less desirable factors, such as walk-up buildings,” said Letizia Garcia Casalino, head of residential services at Colliers.
But more affordable flats like the one Lau got are getting harder to find, agents said.
Only one out of four flats rents for HK$15,000 or less, said Buggle Lau ka-fai, chief analyst of Midland Realty.
Such flats may become even scarcer. Banks have started charging higher mortgage rates, leaving fewer current renters giving up their places to buy homes.
For example, Sun Hung Kai Properties has cut the prices of its projects twice in less than a month, but fewer than half of the flats up for sale at its residential project in Yuen Long were sold last Sunday.
“We expect more to turn to the rental market from purchasing in the third and fourth quarter of this year. And such a wait-and-see sentiment in the once red-hot property market will drive up the leasing market,” said Derek Chan, head of research at Ricacorp Properties.
“[Renters] may have to go to Tuen Mun or Yuen Long to find an affordable nice flat – far away from downtown,” Chan said.