Hong Kong Continues To See Soaring Home Rentals – OpEd
By Elmer W. Cagape
Over a span of two weeks, all I heard from friends was that most of them were slapped with raises in homes they rent. Whether it’s apartment units at LOHAS Park or Metro City in Tseung Kwan O, Caribbean Coast in Tung Chung or a village house in Sai Kung, they all sounded off with the same tone of disappointment.
As a result, some of them are poised to move elsewhere while others are forced to bite the bullet. True enough, we also had the same experience as our landlord confirmed a 9 per cent hike after consulting a neighborhood agency for updates in the property market.
It seems that we are not the only ones who share the same sentiment. A research made by Midland Realty confirmed that home rents have hit a new high in the previous month. Average rents within 100 private residential estates rose by HK$21.15 or about 5.3 per cent since December and outstripped previous high of HK$20.94 in August of last year and HK$20.85 recorded in 1997 at a time the city experienced extraordinary property boom.
The study found out that 72 per cent of all flats leased in the first five months of 2012 were valued at HK$10,000 or above. This is up from 69 per cent recorded in 2011. Midland Realty’s chief analyst Buggle Lau said that despite the raises in rental rates, the market is still considered “healthy” as incomes have risen by 20 to 30 per cent since 1997 and the family income devoted to paying rents was down from 50 per cent in 1997 to 35 per cent recently.
Although property prices have been driven upwards partly due to rising demands from mainland buyers, their younger compatriots who study in the city are also part of the equation. This is according to Ricacorp Property’s David Chan who cited mainland students target flats along the MTR lines between Hung Hom and Tai Po. Obviously, to maintain prices in the market, construction of subsidized units need to be stepped up by the government, as promised by the incoming administration.
But if there are plans to supply the city with subsidized housing, developers are quick to react in defense of the market share they currently exploit. Stewart Leung of Real Estate Developers Association called on the new government leadership not to pursue its plans to flood the property market with subsidized housing while saying “Singapore model of government intervention is unsuitable for Hong Kong”. It is implied that the group is fine with government plans, as long as the group’s interests — ability to build properties for its target market — is not in any way disrupted in a manipulated property market.
“I am most afraid the market will be flooded,” Leung said when asked about the possibility of availability of too many private flats in the next two or three years after a series of land sales by the government recently. Indeed, when home buyers/renters rejoice over a plethora of flats at falling prices, they change places with developers, who, after years of making a killing in the market, could no longer command record-level prices they used to enjoy for a while.
