Hong Kong has retained its title as the world’s most expensive urban centre to buy a home, while neighbouring Shenzhen, the tech of capital of China, has joined the ranks of the world’s five most expensive cities for the first time, according to a survey of 35 cities around the world by real estate consultant CBRE.
The rankings were released after February data showed Shenzhen’s economy surpassed Hong Kong’s for the first time in 2018, growing by 7.6 per cent to 2.42 trillion yuan (US$361.24 billion), or HK$2.87 trillion based on the 2018 official exchange rate from Hong Kong’s Census and Statistics Department. Economic growth in Hong Kong for the year rose by just 3 per cent to HK$2.85 trillion.
The average cost of owning a home in Hong Kong rose 5.5 per cent last year to HK$9.4 million (US$1.2 million), which translates to US$2,091 per square foot for a typical abode measuring 574 square feet (53 square metres), or about 40 per cent more than second-placed city Singapore, CBRE said.
Meanwhile, Shenzhen located across the Hong Kong border in southern China and home to some of the country’s biggest technology companies Huawei, ZTE and Tencent, ranked No 5 globally even as house prices contracted 0.1 per cent last year to an average US$680,283, or US$726 per square foot.
“Upon becoming a Special Economic Zone in 1980, the growth of Shenzhen has been unprecedented, with its population increasing to more than 12 million. It is now one of the world’s wealthiest cities,” CBRE said, adding that the city produced 90 per cent of the world’s electronic goods.
The survey findings underscore the challenge for Hong Kong’s chief executive Carrie Lam Cheng Yuet-ngor, as affordable housing is a mainstay of her administration’s policies. She has proposed a vacancy tax to force developers to add more housing to the city’s supply, and enlarge the proportion of subsidised homes to help lower-income households.
“Last year, Hong Kong saw 17,790 private housing completions but this was not sufficient, given the current pressure on demand in relation to the size of the city and the limited land available,” CBRE said.
Hong Kong’s home prices rose 1.6 per cent in the first two months of 2019, after dropping by 9.2 per cent from August to December, according to data from the city’s Rating and Valuation Department. Property prices were bolstered by stock market rallies in Hong Kong and in mainland China, as well as the dovish stance on interest rates by monetary authorities in the US and in the city.
A straw poll conducted by South China Morning Post between March 22 and 25 showed that more than half of market observers believed a correction in home prices was over.
Homebuyers came back in droves in March with 649 lived-in homes selling for more than HK$10 million each in March, almost double the number of transactions at that price point in February, according to Hong Kong Property, a local agent.
“We’ve seen home seekers eager to enter the market, even though some homeowners have raised prices,” said Richard Lee, CEO of Hong Kong Property. “It is hard to see home prices collapsing in the city, unless the global economy tumbles.”
Various surveys, studies and reports have placed Hong Kong as among the world’s three most expensive cities at least since 2015. CBRE’s study, which began in 2015, canvassed residential property prices from January to August last year, before Hong Kong’s real estate bull market faltered.
Shanghai, China’s largest commercial city, was in third place while Vancouver ranked fourth.
“Shenzhen has one of the highest expected GDP growth rates for 2019 of over 8 per cent and the population is set to continue growing. A shortage of residential land has led to an increase in urban housing estates, but housing completions last year totalled 41,731, lower than the average annual completions over the last decade,” said CBRE.
(Corrects Hong Kong dollar conversion)
More from South China Morning Post:
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