Hong Kong property: residents face difficult decision whether to rent or buy this year

Hong Kong property: residents face difficult decision whether to rent or buy this year

Hong Kong property: residents face difficult decision whether to rent or buy this year

On the rent side, Allan said it’s a mixed bag, adding that rents in some areas in the south of Hong Kong Island were strengthening for units with good kitchens and bathrooms.

Potential buyers queue up at Sun Hung Kai Properties’ sales centre for a chance to buy flats in the developer’s Yoho West residential project on December 2, 2023. Photo: Xiaomei Chen

At the same time, rents have declined in areas like Sai Ying Pun and Sheung Wan by as much as 15 to 20 per cent “as we have not seen a strong return of young expat bankers willing to spend on rentals”, she added.

In the first 11 months of 2023, rents in the city rose by 6.4 per cent from the end of 2022, lifting the rental index to its highest level since December 2019, according to the latest data from the Rating and Valuation Department.

The price of lived-in homes, meanwhile, fell by 5.6 per cent in the same period, dragging the government’s widely watched index to its lowest since February 2017.

Developers such as Sun Hung Kai Properties, the city’s largest by home sales and market capitalisation, have adjusted their pricing to reflect market realities such as poor buying sentiment because of the elevated mortgage rates. It recently priced flats in Yoho West, its latest residential project in Tin Shui Wai, at levels seen six years ago.

Still, some analysts feel renting is a better option in the current high-interest rate environment.

Commuters walk past residential property advertisements displayed in Wong Tai Sin. Photo: Edmond So

The Hong Kong Monetary Authority (HKMA) maintained its base rate at 5.75 per cent on December 14, after the Federal Reserve left its target rate in the 5.25 per cent to 5.5 per cent range following the Federal Open Market Committee’s last meeting of 2023.

It was the fourth pause since the Fed began its rate-hike cycle in March 2022. In total, the HKMA has increased the base rate by 525 basis points since March 2022, even as the city’s economy was mired in a recession.

“Despite developers offering further discounts to their primary projects, interest rates remain high,” said Sdever Li, director for residential services at Savills. “On the other hand, the rental market has been stabilising and becoming more flexible. This has made the pricing trends in the rental market more reasonable.”

For those set on renting a home this year, Li said there were many projects, including ones at the high-end, worth checking out.

These include The Peak Plantation Road, which “appears to have an advantageous location, luxury and offers large-size houses [and] could be a top choice for those who prioritise spacious living spaces.”

Another option worth considering is Mid-Level’s Branksome Crest, particularly when its refurbishment has been completed, making it an “attractive choice, especially for those looking for a combination of quality and convenience”.

“For individuals seeking flexibility in terms of size and rental terms, West Kowloon’s Town Place seems like a suitable option,” Li said. “With various sizes available and flexible terms, it caters to different needs and preferences.”

Hong Kong home sales sink to 33-year low in 2023

However, the current low property prices should encourage prospective buyers to snap up homes available on the market, said Sammy Po Siu-ming, CEO of Midland Realty’s residential division for Hong Kong and Macau.

Investors will find ample opportunities to take advantage of the fall in home prices, he said.

In October, the government halved the buyers’ stamp duty to 7.5 per cent and waived the special stamp duty equivalent to 10 per cent of a home price for owners who resell property after two years, from three years previously.

Po said the pressure from rising mortgage payments has been offset by lower property prices, which have fallen by 20 per cent from their peak.

“It increases the attractiveness for long-term investors to purchase properties for rental income,” Po said. “It is a good time to buy property while prices are low.”

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