Some of Hong Kong’s prospective apartment buyers may no longer settle for properties as small as a car-parking space.
Future residential projects on government land must comply with a new size requirement for flats, according to the Development Bureau.
Hong Kong announced the decision in December 2021 during the launch of a sale-by-tender program for the first quarter of 2022.
The new rule aims to improve living conditions in the city, especially among nano-flat dwellers. Rising prices led many residents to sacrifice space in exchange for mortgage-funded, tiny homes.
Each new flat built on government land would measure at least 26 square meters (approximately 280 square feet).
What Are The New Size Requirements For Flats?
Each new flat built on government land would measure at least 26 square meters (approximately 280 square feet). Development secretary Michael Wong said that the minimum size applies to a property’s saleable area.
Wong cited a residential project along Anderson Road as the benchmark for setting the new rule. A subsidized housing plan in the area consists of flats spanning at least 23 square meters each.
A 10% increase in size seems trivial, but it creates a significant problem for potential buyers’ mortgage applications.
The new size requirement resonated well at first glance with many of Hong Kong’s first-time homebuyers. A closer look and the real problem will unravel: bigger flats mean higher prices.
Affordable Or Bigger? Buyers Face A Tough Choice
The new size requirement resonated well at first glance with many of Hong Kong’s first-time homebuyers. A closer look and the real problem will unravel: bigger flats mean higher prices.
For example, a pre-sale flat in Hong Kong may qualify for up to 90% mortgage financing if it costs less than HKD 6 million (US $770,640).
The situation could then become a difficult choice between affordability and living space. Some analysts believe that first-time buyers would still choose cheaper flats if it means being qualified for a bigger loan.
In other words, nano flats in Hong Kong won’t fade away into obscurity anytime soon. A combination of scarce developable land and overpopulation also sustains the construction of ultra-tiny apartments.
As of July 2021, the UN estimated more than 7.5 million people in Hong Kong. Its land size of 1,106 square kilometers indicated almost 7,200 people per square kilometer.
A square kilometer equates to approximately 186 football fields, but not everyone gets the same amount of space.
If you find it hard to imagine the disparity in living spaces, think about a typical parking space. A car park in Mount Nicholson fetched HKD 10.2 million (US $1.3 million) in 2021.
On the other hand, the T Plus building at Tuen Mun features 128-square-foot nano flats. Each one costs at least HKD 1.738 million (US $223,000).
Not even the Covid-19 pandemic swayed property experts’ opinion about growth prospects for home prices in Hong Kong, according to OKAY.com.
High Prices Impede A First-Time Buyer’s Dream
Homeownership rates in Hong Kong have stayed below 50% since 2018, according to the Census and Statistics Department. In 2012, the rate reached 52% and steadily declined through 2016 at 50.3%.
The level pales in comparison to Singapore where homeownership rates have remained above 90% since 2012, despite similar land-supply problems. The country’s area comprises 728.6 square kilometers of land.
High home prices in Hong Kong have dashed many first-time buyers’ hopes of owning houses—and the problem might become worse.
Not even the Covid-19 pandemic swayed property experts’ opinion about growth prospects for home prices in Hong Kong, according to OKAY.com.
Another consequence of the new size requirement for flats would involve an uneven inventory. Property developers would favor certain places where building affordable yet bigger flats are equally achievable.
For example, nano flats became prevalent in New Territories because of lower prices per square foot than in urban areas.
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