Hong Kong is a dynamic international city with a mixture of Chinese and Western cultures. The city is a densely populated global financial hub with numerous skyscrapers. Meanwhile, three-quarters of its land is countryside. Hong Kong has a vibrant environment with a great deal to offer residents and visitors alike.
The attraction of Hong Kong as a business destination relies on its low tax and non-interventionist regulatory regime, together with a low rate of borrowing and free capital flows. Its proximity to China and close relationships with Europe and the US have enabled an unrivalled level of international business transactions and partnerships to be brokered.
However, the popularity of Hong Kong means that affordability in its housing market has long been stretched. Today it boasts the highest average house price at $1,235,000, as well as the highest average prime property price at $6,873,000.
Overall, prices for residential property in Hong Kong are more than double the prices in 1997, and the city was recently named the least affordable housing market for the eighth year running. However, private residential prices now have started to cool after 29 consecutive months of growth. This comes as Hong Kong’s banks lifted their Best Lending Rate by 12.5 to 25 basis points to 5.125% to 5.5% in September 2018, which immediately caused a higher mortgage burden for households. Despite this, residential prices increased by 5.5% year-on-year in November 2018.
The International Monetary Fund has recommended that the Hong Kong government should focus on increasing housing supply instead. Last year, Hong Kong saw 17,790 private housing completions but this is not sufficient given the current pressure on demand in relation to the size of the city and the limited land available.