Hong Kong home rents declining so fast that investors may not recover mortgage payments
- Average home rents have fallen 4.2 per cent over just the past two months
- Monthly rental incomes expected to decline sharply when leases come up for renewal
Some investors who bought property in Hong Kong during a mid-2019 peak in prices might not even recover their monthly mortgage payments, as rents continue their headlong dive, industry experts said.
The pandemic has contributed to a massive drop in big-ticket purchases and job losses. More than 134,000 people have lost their jobs, pushing Hong Kong’s unemployment rate to 3.7 per cent in February, its highest level since 2011, according to the Census and Statistics Department. The city’s jobless rate has also risen for five consecutive months now.
“A further, significant drop in new arrivals, senior expat executives, and less demand from mainland Chinese tenants with big budgets, who were the main drivers of the luxury homes market, will result in a rental correction,” said Hannah Jeong, head of valuation and advisory services at international property company Colliers International.
“If vacancies rise, landlords who cannot cover their mortgage payments with rental incomes, will be forced to sell their properties,” she said, adding that this will swell the ranks of homes available for steep discounts, particularly in New Territories.