Looking for a flat for under HK$10,000 per month on Hong Kong Island or Kowloon? No chance, says agency
In Hong Kong, the average cost of renting a typical 450 sq ft flat has risen for 17 consecutive months to a record HK$15,900 per month
Flats to rent for under HK$10,000 (US$1,281) a month have almost vanished from the urban area of Hong Kong – the most expensive housing market in the world, according to the latest research by Centaline Property Agency.
Urban areas refer to Hong Kong Island and Kowloon, although subdivided flats are not included.
The supply of small units with monthly rents below HK$15,000 is also quickly disappearing in the two areas, Centaline said.
On Hong Kong Island, there is not a single flat in a large estate offered below HK$15,000 per month, as cheaper options all come from pencil-style buildings.
In the third quarter, the proportion of private flats measuring less than 430 sq ft that leased for between HK$10,000 and HK$14,999 per month on Hong Kong Island was 14.2 per cent, down from 18.6 per cent in the previous quarter.
In Kowloon the figure was 49.7 per cent, down 9.3 percentage points from 59 per cent in the second quarter.
“There’s a shortage of tiny flats in the city’s downtown, compared to huge rental demand from single young people,” said Wong Leung-sing, associate director of research at Centaline Property Agency.
A 200 sq ft studio in a 30-year-old building in Wan Chai now costs more than HK$16,000.
Wong said Hong Kong rents are supported by solid economic growth and a record low unemployment rate, and he expects rents will continue to rise.
Wong said young professionals in certain industries, for example the emerging IT sector, can earn very good pay and still afford high rents.
High rents will continue, particularly for small to medium-sized flats, until house purchase prices in the city start coming down, said Thomas Lam, head of valuation at Knight Frank.
“For many people in the middle class or below, they cannot afford to buy a flat because of high stamp duties and high housing prices. They can only rent. This is the demand side. In addition, the available stock of affordable housing is not sufficient,” he said.
But, he said, despite the exorbitant rents the rental yield return in the mass residential market remains low at just 2.5 per cent.
“The increase in housing prices is happening faster than rental increases. Rental keeps chasing price. Five years ago, the rental yield of mass residential was about 3.3 per cent but it has dropped to only 2.3 to 2.5 per cent now,” he said.
“Rentals are increasing but at the same time, prices are also going up.”
Statistics from the Rating and Valuation Department showed that home prices reached a record high in August after 17 consecutive months of increases, with the rental index also hitting a record 183.9.
The average rents per square foot for houses with an area below 430 sq ft in August on Hong Kong Island, Kowloon and the New Territories were HK$42.5, HK$35.8 and HK$28.5 respectively, according to the department.
In Hong Kong as a whole, the average cost of renting a typical 450 sq ft flat has climbed for 17 straight months to a record HK$15,900 per month.
The situation is putting further pressure on Hong Kong’s chief executive, Carrie Lam Cheng Yuet-ngor, in her attempts to bring housing prices under control, drawing even more attention to the housing policies she may outline in her maiden policy address on Wednesday.