Daily Management Review

Hong Kong refuses tiny apartments


12/11/2018


Nano apartments, announced as one of the ways to solve the problem of housing shortages in Hong Kong, are losing popularity as quickly as they have attracted public attention, Bloomberg writes.



Mstyslav Chernov
Mstyslav Chernov
Two years ago, a residential real estate developer in the New Territories presented apartments smaller than a parking space.

Sales in the project, where some apartments have an area of only 12 square meters, did not cause much interest. Only two of the 73 apartments were sold.

There is a decline in housing prices in Hong Kong. According to Centaline real estate agency, real estate prices fell by 6.3% compared with the August peak. Midland Realty said last month that sales of new homes in November were at their lowest since early 2016.

History shows that sales of small apartments tend to suffer more during the price correction. In 2015-2016 the cost of apartments of less than 40 square meters fell by 12% compared with a fall of 9% in apartment prices from 70 to 100 square meters.

This could be bad news for developers that are hoping to make money on these tiny flats. Last year, apartments the size of the Tesla Model X was sold for about $ 500 thousand.

Housing prices in Hong Kong fell in August for the first time since March 2016 because the trade war between the United States and China, the accelerated delivery of new apartments and higher mortgage rates pushed the most expensive residential real estate market in the world to a turning point.

Low interest rates, a limited supply of housing and large capital flows from buyers from mainland China have contributed to a 165% increase in housing prices over the decade. In this regard, the authorities have repeatedly warned about the risks of a "bubble" in the real estate market.

However, the era of cheap money is coming to an end. Homeowners in Hong Kong are preparing for higher mortgage payments, as a number of the city’s largest banks raised interest rates in September for the first time in more than a decade.

source: bloomberg.com






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