In a concerning trend for Hong Kong's housing market, the past month saw a complete absence of applications for presale consents, reflecting a slowdown in the property sector. Furthermore, the completion rates for private homes last year significantly lagged behind the government's objectives, as reported by official data.
The administration's annual target for private home completions was eclipsed by a shortfall exceeding 30 percent, underscoring a market struggling to keep pace with housing demands. Despite this, December witnessed an unprecedented spike in rental returns for small-sized apartments.
A mere 13,852 units reached completion in the previous year, which is the lowest in four years and starkly contrasts with the government's initial projection of 19,953 units, as per the Rating and Valuation Department's findings. A vast majority, over 90 percent, of these completed units were small and medium-sized flats, with class A flats, under 431 square feet, comprising 54.4 percent (7,806 units), and class B flats, ranging from 431 sq ft to 752 sq ft, forming 33.7 percent of the year's output.
In terms of geographic distribution, Kowloon witnessed the construction of 6,938 units, accounting for more than half of the new properties. The New Territories were home to 43.6 percent of these units, while a scant 873 were erected on Hong Kong Island.
The situation seemed even more dire in December, with the number of newly-built flats plummeting to a three-year low of just 44 units, marking a dramatic 98.6 percent decrease from the previous month.
The Rating and Valuation Department indicated a sizeable drop in the private residential property price index by 40.7 points over the last year. In contrast, the rental index experienced a rise of 5.6 points.
The decline in home prices, which have fallen over 20 percent from the 2021 peak amid a faltering market, did not hinder the rental sector for small flats. Class A flats recorded a rental return of 3.3 percent in December, a figure not seen in 11 years. Additionally, the rental yield for class B flats inched up by 0.1 percentage points to 2.8 percent month-on-month, the highest since October 2014.
Larger flats, categorized as class C, D, and E and measuring over 753 sq ft, sustained a stable rental yield ranging from 2.2 percent to 2.5 percent, despite the broader market challenges.
