Hong Kong the world’s priciest home market for the seventh year

Hong Kong kept its ranking as the world’s least affordable urban centre to buy a home for the seventh year running, in a survey that’s likely to throw a perennial problem back into focus during an election year for the city’s chief executive.

The city’s apartments cost 18.1 times gross annual median income in the third quarter of 2016, according to the Demographia International Housing Affordability Survey’s study of 406 cities around the world. That’s a slight improvement from the 2015 study, which stood at a record 19 times income, according to Demographia.

“This improvement is a positive development,” according to US-based Demographia. “However, much greater improvement in housing affordability is needed.”

Hong Kong is the sole Chinese city to be included in the study, which classifies any region with a median multiple exceeding 5.1 as “severely unaffordable.” The city has maintained that dubious honour since at least 2010, when its media multiple was 11.4 times.

Sydney was the second least affordable housing market, with prices at 12.2 times median income, followed by Vancouver at third place.

Hong Kong’s home prices soared to a record last November after climbing for eight consecutive months, according to the government’s December data. Apartments at the South Horizon complex in Aberdeen soared to HK$16,497 per square foot in November, almost 13 per cent higher than in September 2015, according to Centaline Property Agency.

The price-to-income ratio, which is a good measure for buyers, indicates that housing affordability is “terrible” in Hong Kong for those trying to get in on the housing market, said JLL’s head of research Denis Ma.

Faced with spiralling prices and increasing public outcry, Hong Kong’s then Chief Executive Leung Chun-ying imposed on November 5 a standard 15 per cent stamp duty on home transactions to cool the market. The measure appeared to have gone some way to cooling speculations, although the prices of new launches since then continued to set fresh records.

“We expect transaction volumes to remain low in 2017, after the government’s recent increase in stamp duty, which will put pressure on pricing,” Ma said. “We still expect housing prices to end the year higher despite bumps along the way.”

Developers are showing no signs of abatement, as MTR Corp., the city’s metro operator, said it received 39 bids for a plot of residential land next to the Wong Chuk Hang station, making it the most sought-after parcel on offer.

The site, which potentially can accommodate 800 apartment units totalling 576,950 square feet, is valued at between HK$8 billion and HK$9.8 billion, or HK$14,000 to HK$17,000 per square foot.