Sky's the limit for property prices
Asia Briefing was in Hong Kong last week, where housing is a topic of conversation in much the same way that it used to be in Ireland during the boom years, and in recent weeks the property market has thrown up some bizarre tales of excess.
As one of the mostly densely-populated cities in the world, Hong Kong apartments are famously small and wildly expensive – an influx of buyers from mainland China has seen house prices skyrocket.
News late last month that an individual car parking space has sold for HK$1.3 million (€130,000) raised barely an eyebrow in a territory increasingly resigned to hair-raising stories from the world of real estate. This treasured parking spot was located in the New Territories area, Hong Kong’s hinterland, not even downtown.
The government now fears house prices are pushing home ownership beyond the reach of many of its seven million people, which could see a loss of competitiveness and force a brain drain in the future.
The price of small- and medium-sized apartments surged 20 per cent in the first nine months of the year.
“If we cannot, within the phase of the next two or three decades, generally increase the space in Hong Kong, the best and the brightest of the next generation will leave us,” the territory’s chief executive Leung Chun-ying, or CY Leung, told a gathering at the venerable Foreign Correspondents Club.
“We need to have adequate land supply not just to meet new demand, but also to give people more elbow room in their living space and their work space,” he said.
About 32 per cent of the more than 1.1 million private housing units in Hong Kong are smaller than 39sq m (430 sq ft), with another 49 per cent between that size and 70sq m (752sq ft), according to figures from the government’s rating and valuation department.
Leung has promised to make housing more affordable for ordinary people since he took office in the semi-autonomous city in July. He was elected by a 1,200-strong committee which is dominated by the pro-Beijing business community.
In October, the government imposed new taxes on foreign buyers and increased stamp duty on resale within three years, in a bid to cool the overheated housing market.
The chief executive is in hot water himself over property issues, amid revelations that he built illegal structures at his house on The Peak, which overlooks the territory.
Hundreds of people demonstrated against Leung, not because they particularly cared about the housing regulations, but because during the election campaign, he attacked his rival Henry Tang for having an illegal basement built underneath his house, a scandal that ultimately forced Tang out of the race.
Leung, who is a quantity surveyor, has been forced to apologise to the people of Hong Kong and has been repeatedly questioned in the Legislative Council about the structures. He has survived a no-confidence vote but local media say his reputation has been tarnished.