“Rentals are increasing but at the same time, prices are also going up,” says Thomas Lam, head of valuation at Knight Frank.
It’s now harder to rent an apartment for less than HK$10,000 (S$1,742) per month in Hong Kong’s two urban areas as such flats are nearly no longer available there, reported the South China Morning Post, citing a new study by Centaline Property Agency.
The city areas refer to Kowloon and Hong Kong Island, but subdivided flats were excluded in the research.
Centaline also revealed that the supply of small flats that can be leased for under HK$15,000 (S$2,607) is also quickly dwindling in these two sub-markets.
In Hong Kong Island, there are no flats in large estates with rental prices below HK$15,000 per month, as affordable options are all located in pencil-style towers.
As of Q3 2017, the percentage of private units measuring under 430 sq ft in this sub-market that have been rented out for HK$10,000 to HK$14,999 a month fell from 18.6 percent in the previous quarter to 14.2 percent. In comparison, that in Kowloon declined from 59 percent to 49.7 percent.
“There’s a shortage of tiny flats in the city’s downtown, compared to huge rental demand from single young people,” said Centaline associate research director Wong Leung-sing, adding that tenants now need over HK$16,000 (S$2,781) to occupy a 200 sq ft studio in a 30-year-old building in Wan Chai.
Moreover, data from the Rating and Valuation Department revealed that the average cost of leasing a typical 450 sq ft flat across Hong Kong increased for 17 consecutive months to a record HK$15,900 a month in August.
According to Knight Frank valuation head Thomas Lam, rents in the city will remain high, especially for small and medium units, until home prices start falling.
“For many people in the middle class or below, they cannot afford to buy a flat because of high stamp duties and high housing prices. They can only rent. This is the demand side. In addition, the available stock of affordable housing is not sufficient,” he added.
This article was edited by Keshia Faculin.