Record-breaking sale of HK$10 million subsidised flat prompts calls for further public housing restrictions in Hong Kong
Three-bedroom property in Mong Kok was bought for almost six times the original 1998 price
Hong Kong’s subsidised housing market is setting fresh records, with a government-built flat being sold for more than HK$10 million (US$1.27 million), despite new measures aimed at taming runaway property prices.
At the same time, market watchers are looking for signs of a tipping point after major developer Sun Hung Kai Properties (SHKP) put flats at one its latest projects on sale at the cheapest prices so far this year.
A three-bedroom, 592 sq ft flat at Charming Garden estate, a Home Ownership Scheme (HOS) project in Mong Kok, sold last week for HK$10.65 million, or HK$17,990 per square foot, according to property agency Centaline’s data on Wednesday.
It was almost six times the original HK$1.82 million the owner reportedly bought the flat for in 1998.
It also marked the first time an HOS flat was sold for over HK$10 million, but it did not break the price record per square foot. That milestone was set by a 211 sq ft flat in Ho Man Tin, which was sold for HK$18,863 per square foot earlier this month.
“Such out-of-control prices only go to show that the government has missed the mark with its housing policies,” lawmaker Wilson Or Chong-shing said.
“The government should amend the Housing Ordinance to lengthen the resale restriction period from the current five years to 10 years to prevent government subsidised flats from being used as a tool to earn a quick profit.”
Anthony Chiu Kwok-wai of the Federation of Public Housing Estates said: “These flats are subsidised with taxpayers’ money. They should be reserved for people who really need a roof over their heads, not those who want to make a profit.”
The head of the Charming Garden branch of Centaline Property Agency, Leslie Chu, said he was “a bit surprised” by the record transaction price, but said it was not too unreasonable.
“The location of Charming Garden is good. It is in Mong Kok, close to the upmarket developments and shopping centres around the Olympic MTR station in western Kowloon,” he added.
“Perhaps the buyer thinks prices will continue going up.”
This comes after Chief Executive Carrie Lam Cheng yuet-ngor launched a slew of new policies last month aimed at easing the city’s housing crisis by providing more affordable homes. This included putting 4,431 HOS flats on the market next February at about half their market price, as opposed to the previous 30 per cent discount.
Thomas Lam, a senior director at international property consultancy Knight Frank, expected prices to remain high in the medium term.
“There could be some impacts of the Sino-US trade war, but as long as the stock market is not greatly hit, a so-called collapse of the property market is highly unlikely,” Lam said.
But others were looking at a possible tipping point after SHKP said it was offering 108 flats at its Park Yoho Milano development in Yuen Long at an average price of HK$13,756 per square foot, about 10 per cent lower than prices for lived-in homes at its five-year-old Riva project nearby.
Also on market watchers’ radar are plans by two large property investors in the city to sell chunks of their commercial and residential holdings, worth a combined HK$12.5 billion.
Stan Group and Tai Hung Fai Enterprise will sell HK$8 billion and HK$4.5 billion of their residential and commercial real estate holdings respectively, through tenders.
“The tenders signal a change in market [sentiment] from being upbeat to more cautious,” veteran investor Lai Wing-to said.
“Because of factors that cloud the outlook, investors who hold a lot of assets may want to offload and cash in to maximise their war chest and buy again when prices drop.”
Analysts noted headwinds such as the government’s cooling measures, volatile stock markets, global trade tensions and the prospect of interest-rate rises.
“The property market, including residential and offices, will be flattish with not much chance of a surge. There will be low single-digit growth at most,” said Raymond Cheng of CGS-CIMB Securities.
“Taking factors such as rising interest rates and the uncertain stock market outlook, the market has become less bullish than before. We are almost at the peak [of property prices].”
Meanwhile, Housing Authority subsidised housing committee chairman Stanley Wong Yuen-fai said it was only fair to consider further tightening the resale restrictions for HOS flats beyond the five years homeowners must now wait, as more heavily discounted flats are on the way next year.
Under the old rules, flat owners could resell their flats at any time after they pay an extra fee – the discount rate they received at the time they bought the flat multiplied by its current market value.
They can now also only sell the flat at the original purchase price to eligible first-time buyers who meet certain income and asset limits within the first two years of ownership.