Q&A With Our Experts, September 12, 2012
Q: I live in Sha Tin but plan to move closer to my daughter's school in Kowloon City. I would like to buy a two-bedroom flat in districts such as Kowloon City or To Kwa Wan. My budget is less than HK$4 million but I don't want to buy a flat in an old housing estate. Could you give me some suggestions?
A: If you are looking for a flat in a large housing estate, you could consider small flats sized 500 to 523 sqft below the 10th floor at the 6-year-old Grand Waterfront in To Kwa Wan. Flats fitting this description have recently sold for between HK$3.79 million and HK$4.1 million. Flats on higher floors sell for more than HK$4 million.
If you are willing to buy a flat in a small residential project, you could consider City 151 and Metropolitan Rise, in To Kwa Wan, or 1 Lion Rock Road and 10 South Wall Road, in Kowloon Bay. Those are the newer housing estates in the area and flats of from 470 to 591 sqft, sell for HK$4 million and upwards.
Patrick Chow is the head of research at Ricacorp Properties.
Q: I am aged 27 and have started saving for my first flat this year. My monthly salary is HK$22,000 and I would like to buy a 400-500 sqft flat within the next five years, or ideally in three years if possible.
Can you give me some financial advice on the minimum amount I should save a month? This is because I am also thinking about studying part-time for a master's degree and I would like to know if it is financially viable to study and save for a home at the same time.
A: The answer will depend on many factors such as which district you want to live in, by how much you expect your salary to grow, and how interest rates and flat prices change in the next few years.
Let's assume all these factors remain constant and that you can save HK$12,000 a month. You will then have saved HK$720,000 in five years, excluding any gains from interest. Based on unchanged flat prices, a 400 to 500 sqft flat may cost about HK$4 million. You can then make a down payment of HK$400,000 and borrow 90 per cent of the flat value.
You will also need about HK$90,000 for stamp duty, about HK$40,000 for an agent's commission and HK$10,000 for a lawyer. The balance, or HK$180,000 can be used to settle other payments such as renovation costs.
Of course, it would be best to save as much as possible. You may also check if there are low-risk financial products which can help your savings grow.
Cookie Wong Wing-yan is an associate director at Ricacorp Mortgage Agency.