CLOSE X

Register - if you don't have an account

Yes! Sign me up for Global Property Guide's fortnightly email newsletter.


Login - for registered users

Forgot Password?
Explore destinations
continent map couldn't be loaded Pacific Europe & Russia North America Latin America Asia Africa Middle East Caribbean

 


Financial Overview

Directory

Property Search

Global Statistics

Regional Statistics






Last Updated: May 18, 2017




Hong Kong’s property market continues to rise. Hong Kong’s residential property price index soared 14.29% (14.4% inflation-adjusted) during the year to February 2017, a sharp turnaround from a y-o-y decline of 6.11% (-8.82% inflation-adjusted) during the same period last year, according to the Ratings and Valuation Department (RVD). Quarter-on-quarter, residential property prices increased 1.99% (1.89% inflation-adjusted) in February 2017.

Real incomes have virtually stagnated in Hong Kong for years.  But house prices have tripled from 2003 to 2015.

Housing demand has been propelled by a combination of stringent government regulations on development, low interest rates, and currency stability; while the supply of land, which the government controls, continues to diminish.  The latest house price rises come despite the government’s decision to raise stamp duties for all non-first time homebuyers starting November 2016. Demand is surging. House price rises are accelerating. Residential construction activity is rising sharply.

Smaller-sized properties have had the biggest price increases. Prices of apartments smaller than 40 sq. m. surged by 16.3% during the year to February 2017, and apartments 40-69.9 sq. m. rose by 13.9%. Prices of apartments 70-99.9 sq. m. rose by a meager 1.5%, while prices of apartments 100-159.9 sq. m. increased 7.8%. Prices of apartments with sizes bigger than 160 sq. m. rose by 5.9% y-o-y in February 2017.

The total number of property transactions in Hong Kong increased 2.3 times to 4,079 in February 2017 from the same period last year, based on RVD figures, while sales values more than tripled to HK$36.46 billion (US$4.7 billion) over the same period.

Residential construction activity is also rising strongly. Completions rose by 29.4% in 2016 from a year earlier, to 14,595 units, according to the RVD.Likewise, housing starts surged 80% to 25,500 units in 2016 from a year earlier – the highest level since 2000, according to the Transport and Housing Bureau.

From 2008 to 2013, house prices skyrocketed by 134% (95.7% inflation-adjusted), driven by a flood of money in the wake of the global financial crisis.

The market slowed in the first half of 2014, with house prices rising only by 2.9%, due to government cooling measures. But the housing market bounced back quickly in the second half of 2014, with prices rising by 13.6% in Q4 2014, 19.6% in Q1 2015, 20.4% in Q2 2015, and 15% in Q3 2015. After a brief housing market slowdown from Q4 2015 to Q3 2016 amidst Hong Kong’s economic slowdown and decline in tourist arrivals, house prices recovered rapidly by end-2016.

Hong Kong’s currency peg to the dollar kept borrowing costs near record lows, fuelling continued property demand.

Hong Kong’s property market is expected to remain robust in the coming months, amidst strong domestic and foreign demand and an improvement in economic conditions.

“Whilst domestic demand has been strong, mainland Chinese buyers have been investing in Hong Kong residential properties as a hedge against possible further depreciation of the renminbi,” according to Colliers International.

Hong Kong House price annual“Demand in the primary market should remain unaffected by the implementation of the new curbs in the near term, since developers have adopted sales strategies such as offering mortgage financing, discounts on stamp duty, and reducing unit sizes to secure buying interest,” the Colliers report added.

Hong Kong's economy grew 1.9% in 2016, after growth rates of 2.4% in 2015, 2.7% in 2014, 3.1% in 2013, and 1.7% in 2012, according to the Census and Statistics Department. The economy is expected improve this year, with projected GDP growth of 2% to 3%. This is in line with the International Monetary Fund (IMF)’s projection of a 2.4% growth this year.

Analysis of Hong Kong Residential Property Market »


RENTAL YIELDS
Last Updated: Aug 14, 2017



Hong Kong's property market is in a select band of cities where gross rental yields - the percentage return to owners on renting out their property - is only just above 2%. Effectively, this means that landlords are unlikely to make any profit on their apartments, once empties, administration costs, cleaning and repairs, and other costs are taken into account. Or, if not nothing, then very little. Other such cities are Monaco and Taipei.

That's not to say rents are low. You will pay USD 7,000 per month for a 120 square metre (sq. m.) apartment in Mid Levels. But if you want to buy it, it is likely to cost you USD 3 million.

Hong Kong is not a ‘typical’ market. It is a place where the rich choose to park assets in the form of apartments, as part of a diversified asset-safeguard strategy - like Monaco and Singapore. Such markets typically have lower rental yields than more ‘normal’ housing markets.

Round trip transaction costs are high for foreign buyers in Hong Kong (though the surcharge is unlikely to be permanent). See our  Property transaction costs analysis for Hong Kong and  Property transaction costs in Hong Kong, compared to the rest of Asia.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Feb 03, 2016



Rental Income: Net property income is taxed at 15% (previously 16%). Net income is computed by deducting a standard 20% for repairs and outgoings from the assessable value (gross rent less irrecoverable rent and rates paid by owners).

Capital Gains: No capital gains tax exists in Hong Kong.

Inheritance: Inheritance tax or estate duty was abolished from 11 February 2006.

Residents: Taxation in Hong Kong is based on the territorial source principle; i.e., where the income was earned. Income derived from outside Hong Kong is not taxed in Hong Kong.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Sep 30, 2014



The total roundtrip transactions costs of buying and selling an apartment are high. There is a special stamp duty (SSD) at varying rates, from 5% to 20%, depending on the holding period of the residential property. Property held for longer than 36 months will not be subject to SSD. There is also buyer’s stamp duty BSD) at a flat rate of 15% on all residential properties acquired as of 27 October 2012.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Jun 20, 2006



Landlords have an easy life in Hong Kong.

Rents: Rents can be freely negotiated in the private sector, which comprises about half of the rental market.

Tenant Security: The Landlord and Tenant (Consolidation) Ordinance 2004 removed security of tenure, i.e. domestic tenants no longer have the statutory rights to renew their tenancy at prevailing market rates.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: May 18, 2017


Hong Kong’s modest economic growth

hong kong apartments for sale Hong Kong's economy grew 1.9% in 2016, after growth rates of 2.4% in 2015, 2.7% in 2014, 3.1% in 2013, and 1.7% in 2012, according to the Census and Statistics Department.

The country’s merchandise exports declined by 0.5% in 2016, after falling by 1.8% in 2015, while merchandise imports fell by 0.9% after declining by 4.1%.Retail sales dropped 8.1% in 2016.

Visitor arrivals dropped 4.5% y-o-y in 2016, after falling by 2.5% in 2015 and the worst figures since 2003 when the city was struck by the deadly severe acute respiratory syndrome (SARS) outbreak, according the Tourism Board. The decline was mainly due to a slowdown in the number of tourists from Mainland China, which account for almost 80% of all visitor arrivals in Hong Kong.

Tourism Board chairman Peter Lam Kin-ngok expects 2017 to be another challenging year for the tourism sector, as its strong currency, pegged to the US Dollar, has made Hong Kong expensive for overseas travellers, especially those from the mainland.

Hong Kong gdp inflationNevertheless the economy is expected improve this year, with projected GDP growth of 2% to 3%, according to government estimates. This is in line with the International Monetary Fund (IMF)’s projection of a 2.4% growth this year. During the first two months of 2017, both merchandise exports and imports increased 6.7% and 9.3%, respectively.

Hong Kong’s small open economy depends largely on variables it cannot control – tourist spending, trade income, and foreign money inflows. With an average real GDP growth rate of 7.4% from 2004 to 2007, growth slowed to 2.1% in 2008, and then contracted by 2.5% in 2009. The economy bounced back strongly, with real GDP growth rates of 6.8% in 2010, and another 4.9% in 2011, according to the IMF.

In March 2017, inflation eased to 0.5%, from 2.9% in the same period last year, according to the Census and Statistics Department. The country’s inflation rate averaged 4% from 2011 to 2016.

HK’s overall inflation rate is projected at 2.6% this year and 2.7% in 2018, according to the IMF.

The country’s jobless rate remains low. Unemployment was 3.2% in Q1 2017, down from 3.4% in the same period last year, according to the Census and Statistics Department. Hong Kong’s unemployment rate averaged 3.5% from 2010 to 2016, down from an average of 5.5% from 2000 to 2009, according to the IMF.







  • Pro-landlord rental market
  • Low transaction costs
  • Strong & stable economy
  • Moderate rental income tax
  • Low to moderate yields
RESIDENTIAL PROPERTY FACTS
Price (sq.m): $26,325 For a 120 sq. m. property, usually an apartment.
Rental Yield: 2.62% For a 120 sq. m. property, usually an apartment.
Rent/month: $7,470 For a 120 sq. m. property.
Income Tax: 11.40% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 34.11% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: n.a. Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

News & Discussion



Free Newsletter

Fortnightly updates from the global property arena directly to your inbox.


Email Address:





Connect to professional advice in Hong Kong





PROPERTY RECOMMENDATIONS

 
Download free property reports from international research houses

Our Newsletter

 
Fortnightly updates from the global property arena directly to your inbox.

Manage subscriptions