Jason Li, a 22-year-old from Shandong province who will be pursuing a master’s degree at Hong Kong University of Science and Technology starting in September, recently put down a deposit on a three-bedrooms flat in Fortress Hill immediately after viewing the unit.
Li’s budget was HK$20,000 (US$2,560) per month for himself and two flatmates. But the rent for the unit he leapt to get, in Fortress Metro Tower, is HK$26,000 per month.
“We increased our budget by HK$2,000 per person to secure it,” he said. “It was so popular that even after we viewed the house in the morning, there were other people interested in viewing it in the afternoon. Therefore, bargaining was simply impossible.”
Li’s experience is an increasingly common one in a competitive rental market where prices are on the rise. Peak rental season is approaching during the second quarter as mainland Chinese students like Li are coming to Hong Kong earlier to look for housing. At the same time, an increasing number of foreign professionals are arriving in the city for work.
“In my experience, it’s easy to find a house, but it’s hard to find a good one,” Li said. “Good properties are rare on the [online] platforms and are often snapped up as soon as they are listed.”
In fact, Li’s group decided to pay for an extra month to ensure they would have suitable housing. “If we wait until August to start looking for a house, it will be too late,” he said. “That is why we decided to start the lease for that house from July 1, even though we will only move in during August.”
The average per-square-foot rent of private residential units in May, calculated on the basis of saleable area, was HK$36.37, a month-on-month increase of about 1.2 per cent. It was the third consecutive monthly increase and a 53-month high, dating back to December 2019, according to Midland Realty.
The cumulative rate of increase for the first five months of the year hit 1.54 per cent, according to Buggle Lau Ka Fai, Midland’s chief analyst.
The per-square-foot rent for 10 major housing estates increased month-on-month in May, according to Midland. Among them, Whampoa Garden in Kowloon City district recorded the largest month-on-month increase of 7.9 per cent, while Metro City in Tseung Kwan O and Kornhill in Taikoo Shing increased by 5.8 per cent and 5.4 per cent, respectively.
The rental index has been rising steadily since last year, and the trend will continue this year, with a 5 per cent increase for 2024, according to Cushman and Wakefield’s forecast.
A so-called nano flat of 121 sq ft at The Unit serviced apartments in Happy Valley was leased recently for HK$12,000, or HK$101 per square foot, according to local reports.
The phenomenon of “rising rents and falling property prices” is further expanding, Lau said. Although home sales jumped after the withdrawal of all property curbs in February, they have since plunged, and prices are on a “race to the bottom”, in the words of one analyst.
Incoming students and foreign workers are competing for space in residential buildings, like this one in Wan Chai. Photo: Felix Wong
The year-to-date decline is about 2.15 per cent, according to Midland.
“Hong Kong residential rents will continue to grow at a steady pace with the support of both local and overseas demand,” said Martin Wong, director and head of research and consultancy for Greater China at Knight Frank. “Due to high interest rates, some prospective local buyers will defer their purchases and rent flats instead.”
Hong Kong home transactions plummeted more than 30 per cent in June, according to the latest official figures. And the lacklustre sales are weighing on prices, with recent new-unit launches selling poorly despite decade-low prices and prices of lived-in flats skidding to a nearly eight-year low, according to JLL.
Secondary home prices are also suffering, with the official price index from the Rating and Valuation Department falling 1.22 per cent in May, reversing a 0.5 per cent improvement in April. The May index reading of 305.9 is comparable to that of November 2016 at 306.7.
Additional reporting by Junzhe Jiang
