The price level has proliferated and is unaffordable which has become an economic issue. But the homeowners have profited the most, while those who do not have suffered a lot.
The Houses prices have proliferated in the former colony : Hong Kong and the prices have surged over 200% in the past decade, driven by scarce housing supply & big capital flows from the China buyers. And there are several other reasons which are rooting for these high housing prices in Hong Kong.
Hong Kong has been ranked as the most expensive city for living in which home price-to-income ratio is 18.1, i.e., the annual household income should be HK$300,000 proportional to HK$5.4 million which unlikely means that a person has to save for straight 18 years to buy a house, that too if they did not spend anything on other necessities such as food, clothing, healthcare.
In the period of the 1999-2018, the housing market of Hong Kong has experienced roller coaster experiences like recession, vibrant recovery and strong growth of the momentum. The price level has proliferated and is unaffordable which has become an economic issue. But the homeowners have profited the most, while those who do not have suffered a lot. And to be clear, Hong Kong comes in third most in having strong competitive economies.
Small Housing spaces have become common in the world's expensive housing market where people stay in cage-like homes.
"HK$7,000 ($893) is the monthly rent for a little rooms in a shared apartment in Hong Kong, which reverted from British to Chinese rule in 1997"
The factors which taken in the account for the high prices are:
"7,000 people per square kilometer"
Hong Kong stands the 4th position after Singapore in the five most densely populated countries. This creates "Low Supply, High Demand" in the country.
Hong Kong is a hilly area and consists very less living-friendly area , and top of that there is high demand to work and live there because of the World's top Financial hubs in IT & Business - which worsens the prices of the Houses.
Scarcity of the Land:
The land is already less for the living, and top of that government has made the authorized land policies which make them more less. More than 40% land is locked up for the green spaces such as gardens and parks. And in addition to this, some are being locked up for the Historical sites. Therefore, only 7% of the land is used for residential purposes. As above said, the homeowners are profited from this high prices and if the market will crash, they will end up losing the money.
Every year, the city opens up a few lands for the auction. And as per the tendering process, the land is sold to the highest bidder. And since the land is limited and the number of bidders are higher, the prices surge when people bid absurd amounts of money to buy the land. Therefore, all the bids won by the wealthy landers from mainland China. Talking about the statistics, the developers accounted for 10% bids and now they win 40% of the bids.
Hong Kong receives a behemoth amount of foreign cash flow from the other countries specially from China & it tops the financial market in the world which gives the liability of low taxation in personal and corporate. This attracts foreign businesses to trade in Hong Kong. And most of the money launders from the high prices of the land, therefore, if the land prices are decreased, the government has to increase the tax. This is the key reason why the government is not getting serious about the high rise price in housing.
In the real estate market of Hong Kong, China is targeting the commercial establishments by taking over the 30% market in the real estate market. Chinese are ready to launder the huge money which makes Hong Kong dependent on China for the funds of the Chinese capital to strengthen the dent in the commercial property in the world.
Mainland China pays 4.42% higher prices and comprises premium flats in central regions with the large floor areas. If the proportion of the tendering increased for the migrant buyers, the prices of the homes will also surge.
The Greenland Hong Kong lands are so expensive that for the same amount you can buy the castle for sure! But there are a number of other reasons to take in pont, as Hong Kong has the scarcity of the lands, the migrant developers like China buys the land which profits to the government and indirectly to the city public, because they take the minimal taxation from the people. But there are other reasons to be taken into account where the homes have so little space, people are living in cage-like situation.