Green Form HOS Flats Are Approaching the TEN Million Mark

market view

While the US dollar assumes a strong position, interest rates cycle veer upwards and the global stock, debt and currency markets stay unpredictable, it is surprising that Hong Kong’s home prices continue to increase against this unstable financial backdrop. Despite the high prices, the public’s belief in real estate as a safe investment and high loan-to-value ratio offerings from developers has kept new development sales robust, further encouraging potential buyers to enter the market. In addition, it has become a trend amongst developers to invite tenders for the purchase of special or duplex units of large size and limited numbers. As bidders of such units tend to come from wealth, developers are not shy about attaching hefty price tags to these luxury homes. With such sales generating new per-square-foot records, developers can then use them as a reference point for the prices of their next development. Under the hype of sky-high prices for special units, the public have started to quietly accept developers’ pricing scheme as the new norm, inadvertently contributing to the phenomenon of unchecked housing prices. Buyers are keen on scoring the first batch of units in new developments, creating more buzz and prestige for new projects. As a result, lucky draw winners who can pick before everyone else actually think themselves as lucky, and are willing to close the deal at great costs, thinking it’s better to buy early rather than late. Currently, the per-square-foot price of an average new development starts at close to HK$20,000. A flat of decent quality or on a higher level would be packaged and sold as a luxury special unit; it doesn’t even matter if the development is surrounded by old, rundown buildings, or has no view to speak of. In other words, as long as the development has a fancy lobby, a club, a pool and a gym, there will be buyers willing to part with whatever amount developers ask for without thinking twice. 

The secondary market has also seen prices rising across the board. Second-hand homes are usually 20 to 30% lower in price compared to new developments in the same district, but there are fewer offerings available. In some of Hong Kong’s biggest and most recognisable housing estates, new records are being set and broken all the time. If a buyer is fortunate enough to get a home in these estates, they are not going to worry about the price being slightly higher than estimated—it’s a 25-year mortgage, they would think, and an extra HK$100 per month barely covers one lunch. 

This price hike has recently extended to Home Ownership Scheme (HOS) flats as well. Prices for free market second-hand HOS homes are now approaching the HK$10 million mark, with the bank estimate of some high-quality flats already north of HK$10 million. I wouldn’t be surprised if a HOS flat sells for over HK$10 million by the time this article is published. On the flip side, a unit in Cronin Garden, a HOS estate in Sham Shui Po, was recently sold at a price of HK$15,705 per square foot, still much cheaper than a private housing unit of comparable quality. 

Since the HOS free market is one step away from having its first HK$10 million sale, home owners selling Green Form HOS properties—without the need to pay a premium—are not going to lag behind too much. Tung Yuk Court in Shau Kei Wan and Tak Keung Court in Lok Fu have previously seen HK$8 million Green Form flat sales. It’s easy to imagine buyers of old record-setters patting themselves on the back for purchasing those flats at high prices in the past. With extremely scarce secondary market offerings, we are all curious to see which HOS estate will supply Hong Kong’s first HK$10 million Green Form flat.

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