According to the latest squarefoot.com.hk Hong Kong Real Estate Market Outlook (2019 H1) general perception of property prices in Hong Kong among public are expected to keep rising, or at least remain at the same levels, during the next six months. REA Group owned and operated squarefoot.com.hk.
With continuous property price increases, it’s unsurprising that the proportion of non-owners who expect to be able to purchase property in Hong Kong has gone down by 10 percentage points from 2018 H2 (45% in 2019 H1 vs. 55% in 2018 H2). For this reason, people living in Hong Kong have begun looking for various alternatives in order to achieve their dream of property ownership. Haunted flats and co-living spaces in particular are gaining awareness and popularity as options.
Ms. Nerida Conisbee, REA Group Chief Economist, commented that it is external factors causing the Hong Kong real estate market to be much more unstable this year than last. “The US-China trade war is heating up and this is already impacting Hong Kong’s tourism and retail trade. In addition, the HIBOR is increasing and it is going to get more expensive to get a loan. Hong Kong is undersupplied for housing but a slowing economy and difficulty in getting finance is tempering the outlook.”
Mr. Kenneth Kent, REA Group Country Manager – Hong Kong, stated that, “Property prices are still way too high for most people living in Hong Kong, so many have started to explore other alternatives. A new concept of co-living is gaining awareness in the Hong Kong market, and more than half of the respondents are taking an open attitude, there is big potential in this area.
squarefoot.com.hk helps people in Hong Kong to make more informed decisions on property purchases by providing access to real-time and comprehensive real estate information and market-leading insights.”
The squarefoot.com.hk Hong Kong Real Estate Market Outlook has been conducted 15 times since 2012, surveying the market every six months. This is the third time we have cooperated with Nielsen. Nielsen conducted an online questionnaire (from 30 Apr–8 May, 2019) to obtain 1,001 responses from people aged between 18 and 65 years old.
Squarefoot.com.hk 2019 H1 Hong Kong Real Estate Market Outlook key findings:
Respondents increasingly believe purchasing property in Hong Kong has become a more challenging “dream”
Half (50%) of respondents believe property prices have bottomed out following recent shallow declines, but two-thirds (66%) think the prices will rise continuously over the next six months. With the increasing perception of property values as being “too high” (92%), purchase appetite in Hong Kong for the next 12 months in 2019 H1 has dropped to 20%, from 2018 H2 (25%).
Due to the rising property values, fewer people expect they will purchase or own residential property in Hong Kong, with a considerable drop from 55% in 2018 H2 to 45% in 2019 H1. More respondents (44% in 2019 H1) consider purchasing property as a “dream” compared to 37% in 2018 H2, yet respondents expect that they will only be able to purchase property at the age of 44.1 on average, up from 37.7 in 2018 H2.
Respondents are price-sensitive; even when it comes to haunted flat purchases
With property prices continuing to surge, even haunted flats are being considered by the market. Hong Kong people see buying a “haunted” flat as a practical way to own a house in this residential property bull market. Over half of respondents (54%) would consider purchasing haunted flats – 65% of respondents are motivated by price, more than by the nature of incident that occurred (39% of respondents). 45% of respondents will consider the chance of getting a mortgage from a bank and the re-sale value as criteria for purchasing haunted flats.
On average, respondents felt that a 37% discount would be appropriate for considering a purchase of a haunted flat. 45% would only purchase with a discount of 40% or more, and 40% of respondents will consider buying even with just a 20%-39% discount. Around 3% of respondents would consider purchasing a haunted flat with less than 10% discount. The survey also found that haunted flats are relatively more appealing to those aged below 40, with nearly 60% of them (58%) would consider purchasing as long as the price was right.
Property dreams continue to shift overseas due to high prices in Hong Kong
With increasing property values in Hong Kong, overseas properties remain one of the alternatives to achieving the dream of property ownership. Among different regions, Mainland China (43%) and Japan (26%) are still the most popular destinations.
In Mainland China, people look beyond the border for better value properties in the Greater Bay Area – 38% of respondents considering it (34% in 2018 H2). Among the cities of the Greater Bay Area, Zhongshan (43%), Foshan (38%) and Guangzhou (30%) ranked in the top three, with key factors being nearby transportation (68%), amenities near the property (67%) and convenience for travelling to/from Hong Kong (63%). Respondents also concern about the background of the developer (60%), investment value of the property (60%), or development potential of the city (57%).
Nearly half of respondents (47%) are considering making a purchase in the Greater Bay Area because property prices in HK are too high, whereas 35% of respondents think Greater Bay Area is good value for money and purchase it as a vacation home respectively. From an investment perspective, over one-third of
respondents (34%) believe they can generate good investment value, while 22% of respondents rely on property purchases to generate rental income. It was also found that some of the respondents have started planning to extend their ‘living space’ to the Greater Bay Area with 26% considering it as an option for living after retirement, while 22% plan to move abroad.
Overall, 87% of respondents who show interest in the Greater Bay Area are current non-owners of properties in China. The recent incident of unfinished buildings in the Greater Bay Area caught public attention, resulting in 73% of all respondents saying they would visit the actual properties in person before buying, while 59% searched more widely for information on the rental or second-hand market of properties.
63% of respondents preferring to purchase a property in Taiwan have the plan for moving abroad
According to the survey results, Taiwan and Thailand have risen in popularity for those looking to purchase property among the younger segment aged 25 or below, increasing by 9% and 8% respectively as compared to 2018 H2. Surprisingly, the survey has shown that 63% of those respondents considering Taiwan properties are purchasing for moving abroad and 46% treat it as a retirement home. 71% of them consider Thailand properties as vacation houses.
HOS a top choice
For achieving dreams of property purchase, HOS properties undoubtedly remain a top choice in the market. The survey shows that non-owners mostly prefer home ownership scheme (HOS) flats (33%), while around one quarter of them are considering first-hand (26%) and second-hand (23%) private properties. The remaining 18% prefer public housing sold via the market, probably due to lower pricing. Regarding preferences as a first property, HOS is more appealing to the younger segment, especially those aged below 35.
Co-living has gained awareness among general public
Co-living space has gained awareness among the general public recently. 17% of respondents showing interest in renting co-living space, while 42% carry a neutral point-of-view. Co-living space is generally perceived to be more highly preferred by people who are single and on lower incomes, yet the survey showed that 61% of respondents who expressed an interest in co-living spaces were married, and 62% of respondents’ monthly household income was HK$40,000 or above.
Respondents who are interested in co-living explained the key reason of preferring co-living as affordability (57%), while some respondents enjoy living with people with similar interests (40%) and having a better living environment (39%). Less than one third (31%) consider the sufficiency of amenities provided by the co-living space as being the paramount consideration.
About REA Group
REA Group Limited (www.rea-group.com): REA Group Limited ACN 068 349 066 (ASX:REA) (“REA Group”) is a multinational digital advertising business specialising in property. REA Group operates Australia’s leading residential, commercial and share property websites – realestate.com.au, realcommercial.com.au, Flatmates.com.au – as well as Spacely, a short-term commercial and co-working property site. In Asia, REA Group owns leading portals in Malaysia (iproperty.com.my), Hong Kong (squarefoot.com.hk) and Indonesia (rumah123.com), and prominent portals in Singapore (iproperty.com.sg), and China (myfun.com), a leading property review site in Thailand (thinkofliving.com) and SMART Expo Ltd., a specialised organizer in property and investment related events, conferences and exhibitions. REA Group owns Smartline Home Loans Pty Ltd, an Australian mortgage broking franchise group, and Hometrack Australia Pty Ltd, a leading provider of data property services. REA Group also holds a significant shareholding in property websites Move, Inc in the US and PropTiger in India.