Hong Kong Apartment Public Rental Flats Increase in Price

Hong Kong apartment buyers with a limited budget have traditionally had the more affordable option to purchase public rental flats. However, this option may not be available in the near future since the price of a Hong Kong apartment in public housing is increasing rapidly and new pricing records are being set. There have been recent indicators of this increased demand for used public housing in the Hong Kong apartment market. This includes the case where one Hong Kong apartment in this category recently sold for a record price of HK$ 8795 per square feet. Analysts in the real estate sector claim that housing sellers are demanding extremely high prices, in order to take advantage of the rising demand for homes. 

Embed from Getty Images

In 2019, a 598 square feet flat in the Fung Tak public housing estate in Wong Tai Sin area of Kowloon sold for a record price of HK$ 5.26 million(equivalent to $674000), which is $8795 per square feet, a record for public housing. The sales manager of the property agency Full Mark, Simon Suen, which finalized the deal, claimed that the seller had listed the flat for a period of one and half year. He also claimed that the record would be broken soon, since another 480 square feet flat in the same housing estate was likely to be sold within a month for HK $4.8 million, in another deal of the agency.

Suen claimed that the demand for Hong Kong apartment for rent schemes subsidised by the government was likely to increase due to a massive increase in private housing prices. A family with a budget of HK$5 million could only afford a 300 square feet area private Hong Kong apartment. The Housing Authority data released indicates that 1,515 public housing units have been sold in the first six months of 2019, which is 60% higher than the sales in the corresponding period of 2018 and is the highest in three years. Prices of these homes also increased by 10.4 % in the first five months of this year. Kevin Wong from Century 21, also confirmed that home buyers were shifting to public housing. 

Starpro Agency, is a mortgage brokerage and its managing director, Raymond Cheng, believes that the number of deals in housing schemes will increase in future because of the favourable mortgage policies. Home buyers who have lived in homes for less than twenty years can obtain a mortgage of up to 95 percent of the home value, which has to be repaid in a period of 25 years. The banks also do not require any income proof from the buyers since the housing authority is acting as the guarantor for the loan. The government scheme also encourages people to request their parents to vacate their rental flat and purchase public housing, since in this case, a premium of 35 percent on the market value of the new flat does not have to be paid to the government.