Flats getting smaller as home prices soar, but people have better shot at buying own home
As property prices spiral upwards in Hong Kong, the race is on to build smaller and smaller homes.
Dubbed “nano” flats by the Hong Kong media, these homes are less than 200 sq ft, cost about HK$4 million (S$725,000) on average, and are popular with young couples.
In comparison, a so-called shoebox apartment in Singapore is usually about 400 sq ft and costs around $500,000.
Last year, 206 nano flats were completed in Hong Kong, up from 81 in 2013, reported the South China Morning Post, citing government figures.
Such flats made up a tiny 1.4 per cent of the 15,595 new homes built in Hong Kong last year. This year, about 5,900 small homes – less than 430 sq ft in size – are expected to be built, making up 41 per cent of all new flats, property consultancy JLL said.
These small flats have made it possible for young couples to own homes in a central area, such as Wan Chai on Hong Kong Island.
However, analysts warned that an oversupply of such flats is likely to disrupt the market in the long run.
“In the future, when these buyers try to trade up, they will not be able to sell them because of market changes. People may have more money and want bigger flats, so nano flats may not be suitable,” said Mr David Ji, director and head of research and consultancy (Greater China) at Knight Frank.
Hong Kong has pipped London as the top market for luxury homes, setting records with four deals hitting the US$100 million (S$140 million) mark last year. However, there appears to be no limit to how small a flat can get.
According to Hong Kong Building Department records, the smallest flat in Hong Kong is a 61.4 sq ft flat. The flat comes with no bathroom or kitchen space.
That would make it smaller than a carpark space in Singapore, which has to be at least 124 sq ft, according to Land Transport Authority rules.
Currently, there is no rule on the minimum size of a residential unit in Hong Kong, said Ms Cathie Chung, JLL’s national director for research.
Professor Edward Yiu, an urban studies expert and member of the Hong Kong Legislative Council, said that while nano flats affect living standards, imposing rules on flat sizes will mean many people will be unable to own a flat.
The downsizing of flats comes amid a continued rise in property prices in the city, which has made it increasingly difficult for young people to own a home.
Hong Kong’s home price index, which tracks prices in the secondary market, rose for the 12th straight month in March, to a record 319.8.
The city was ranked the most expensive housing market in the world for the seventh straight year last year, according to the annual Demographia International Housing Affordability Survey.
Frustration over home prices was among the reasons thousands of young people joined the 2014 student-led Occupy movement, which pushed for universal suffrage in electing the city’s leader.
Incoming Hong Kong chief executive Carrie Lam, who takes office in July, has made helping more Hong Kongers own a home one of her key priorities.
Ms Yau Wai Ching, 26, a Hong Kong lawmaker who was later disqualified for making a mess of her swearing-in oath, last year made headlines when she said young people in Hong Kong have no room to “bok yeh” due to low wages and sky-high property prices.
Bok yeh in Cantonese slang means to have sex.
Single working professionals like bank executive Josephine Law, 29, welcomed the option of nano flats.
If not for these tiny homes, Ms Law, who earns a monthly salary of HK$30,000, said she would have to work for more than 20 years to buy a flat, given rising property prices.
But will nano flats help resolve Hong Kong’s housing crunch?
Prof Yiu said such flats are “not a solution but a response to the market”. Property prices have risen much faster than salaries, leaving many middle-income households with the option of buying only a 200 sq ft apartment, he said.
“If prices keep going up, flats will get smaller and smaller,” said Prof Yiu.
Source : www.straitstimes.com
Joyce LimHong Kong Correspondent
PUBLISHED MAY 14, 2017, 5:00 AM SGT