HONG KONG (Reuters) - Hong Kong private home prices edged up for the 12th straight month in October, extending a record-breaking run of consecutive monthly gains and adding to home ownership constraints in one of the world’s most expensive property markets.
Private home prices in October rose 0.53 percent from September, according to an index compiled by the Rating and Valuation Department released on Thursday. The index climbed 12.5 percent year-on-year. The government also revised September’s growth from the previous month up to 0.35 percent from 0.27 percent.
Property prices have been shooting up since April 2016 due in part to a supply and demand imbalance. The city’s leader, Carrie Lam, has pledged to address the problem by increasing land supply where possible.
“Property prices are high. It’s unaffordable for most ordinary people. This poses a certain risk to the residential property market,” said Thomas Lam, a senior director at property consultancy Knight Frank.
“In the long-term, high property prices will affect the city’s sustainable development and social stability.”
The former British colony, which maintains separate economic and legal systems from mainland China under a “one country, two systems” arrangement, is the world’s most expensive city for apartments, according to a UBS report.
Last week, developer Wheelock Properties (0020.HK) said a single anonymous buyer purchased two luxury apartments, including one at HK$132,060 (£12,559) per square foot, making it the most expensive apartment per square foot in Asia.
Housing affordability and income equality have surfaced as major issues in Hong Kong with demand for subsidised housing surging recently.
The Housing Society, a non-profit group and a major public housing provider, last week received a record 94,000 applications for the sale of 620 subsidised flats, priced at a discount of 30 percent to the market rate.
The figure marked an oversubscription of 151 times, also a record since the group began selling subsidised flats in 2013, according to the Housing Society.
“The market demand for subsidised housing is huge ... We are willing to work on more projects but more land is needed,” a Housing Society spokeswoman told Reuters.
The government data released on Thursday also showed rents hitting historic highs for an eighth consecutive month, adding pressure to public housing supply, which already has a backlog of more than 150,000 applicants with an average waiting time of 4.6 years.
One in five people in Hong Kong, or 1.35 million, fall beneath the poverty line, the highest number since the city began publishing data in 2009, according to the government’s Poverty Situation Report released in November.
However, maximum income criteria for subsidised housing means many middle class families who aren’t eligible for such accommodation are forced to turn to lower-end private flats, some of which are the size of car parking spaces.
Between 2017 and 2020, the city could see an additional 2,100 “nano flats”, defined as units smaller than 200 square feet, according to property consultancy JLL.
Reporting by Venus Wu; Editing by Sam Holmes