A top management colleague from my Hong Kong office was sharing with a group of us that it gets harder to own a property in Hong Kong. In fact it gets very tough for fresh graduates as their earning would take them ‘forever’ to own a property unless their parents intervene with downpayment. According to the leading job site in Hong Kong, jobsDB, the average starting pay for a university graduate in Hong Kong is HK$14,685. In RM terms, this is over RM8,000. Definitely considered a good starting pay. The fresh graduates could choose to buy a micro-flat / mosquito flat which seems ‘affordable.’ A recent choice they have is this. Buy a Tesla or buy a micro-flat? Both similar ‘sized’ The price is around HK$4 million. The typical downpayment needed would likely be HK$1.6 million. Assuming the fresh graduate saved all his salary, it would take him close to 23 years to save for the downpayment. Note though that it is likely to be far shorter since they would have salary increments, promotions etc. In fact, my staff in Hong Kong office has much higher pay than me after conversion. Haha.
When we look at just a 161 sq ft micro apartment at HK$4 million (RM2.2 million) and start to think what’s the price for those huge units, well, it does not get a 10x multiplier. 1,600 sq ft apartment is definitely not HK$40 million RM22 million). In a recent article in TheStar, the price for Wonderland Villas, an older development looks cheap in comparison to the crazy prices of newer places. Here’s the article and it quoted a 1,600 sq ft apartment at HK$16 million. I did a check at squarefoot hongkong on Wonderland Villas and found out that it’s considered okay, by Hong Kong’s expensive home standards. For HK$4.3 million (RM2.37million), a Hong Konger would already be able to get a home close to 500 sq ft which is definitely more comfortable than the micro-apartments being offered today. HK$8 million (RM4.4 million) would get a family a home close to 1,000 sq ft. A luxury in size for Hong Kong. Of course, for these bigger homes, I think it would be bought by a couple which would make it easier to afford. Here’s an earlier article: Marriage provides property affordability, seriously
Coming back to Malaysia, the choices are slightly better even if many would say that some of these secondary areas are not attractive. No malls, no cafes, no MRTs and many more reasons. I do think that Malaysia would never reach the levels in Hong Kong because Greater Kuala Lumpur is still HUGE and there are way too many areas which are still not that popular today. Do note that when prices become way too unaffordable that NO ONE could buy anything, the property market will crash. These are the few reasons why property market would crash. I hope this does not happen since both the government and private developers are focused on launching affordable units these days. As for fresh graduates, remember to work harder and rise up the career ladder plus save more for investments. Perhaps even start a start-up if you can. As for me, I would prefer to be just a working professional. Everyone’s different. Happy following.
written on 8 July 2017
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