When it comes to Hong Kong, everybody knows that rent there was never in the affordable range. And, even so, it was very hard to find available flats in desired areas, due to high demand. However, the current background generated by the pandemic changed things in ways no one expected, turning Hong Kong into a favorable market for renters. Thus, anyone interested in getting rent in this city should know that now is probably the best time to start looking for a flat.
How much did rents drop in Hong Kong? The last significant drop happened in the last part of the year 2016, when the lower value of rents was recorded. The first quarter of this year brought decreases of US$5.77 per square foot, which is quite significant. Thus, a 2-bedroom apartment can now be rented for approximately US$3,500 per month, compared to US$4,200, which was the value of the rent of the same kind of flat about two years ago.
What led to such drops in what can be considered as one of the most expensive rental markets in the world? A series of factors led to this result, even if property prices had steady values during the past time. One of the factors was that expats left the country due to the social background and job changes triggered by the pandemic. A decline in the number of residents and increasing rates of unemployment affected the purchasing power of people regarding real estate properties and, of course, slowed down considerably the demand for rented units. The anti-government protests that took place recently also took a toll on the real estate market, affecting the value of rental properties.
The most affected properties were the ones located in the Deep Water Bay and Mid-Levels, which offered high-end living conditions. These ones were primarily preferred by expats or wealthy Chinese people, recording drops of 25% in rent values. The second type of property that recorded significant drops is the one located in Soho, a neighborhood in the Sheung Wang district. These ones were highly popular among young adults that landed good jobs and foreign students. In present days, properties in these areas can be rented for 20% less than in their prime time.
According to Patrick Wong, who is a data analyst at Bloomberg Intelligence, the value of rents in Hong Kong may continue to drop, anywhere between 5% and 10% throughout this year. This is all connected with the travel restrictions inflicted by the pandemic and implicit of a population that continues to decrease. As numbers show, the population of Hong Kong recorded a decrease of 0.6% last year only and may continue to drop since 27,000 visa applications were submitted to the British authorities by Hong Kong’s residents.
Also, even if the economy of the area recorded a spectacular comeback during the first quarter, faster than it ever took place in the last 10 years, the levels of unemployment are still quite high, recording values of 6.8% in the month of March. Thus, many of those who lost their jobs made the decision to move back with their families, saving money this way. But, even with all of these happening, the price of selling homes barely dropped, showing an unexpected resilience. We shall have to wait and see if changes happen in this sector as well, or prices continue to remain steady regardless.
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