I was in Hong Hong recently and I was talking to a colleague about buying a home. He has yet to own one and is currently renting but he shared that if one were to look ahead, then the home should not be too small. He was saying that anything above 700 sq ft is acceptable to him. In terms of property prices, buying a home in Hong Kong is something which many would never be able to achieve during their working life. For many non-professional senior citizens, many are only renting a bed today. He then shared that for him, it will be slightly more affordable now. The good news? He got married recently. An even better news? His wife works in the bank which meant lower rates for home loans. As a couple, their combined incomes would allow them to get a decent home. Not a luxury one but definitely big enough just in case they needed to raise a family in the near future. I think he is right in wanting to look for something bigger and slightly further away. The reason is because these days, the new apartments are getting higher (more floors) and smaller. (Mosquito flats?)
According to South China Morning Post in an online article, the number of 215 sq ft flats are rising. There are fewer apartments of 735 sq ft or higher. The main reason for small sizes would be affordability. It seems that property prices have risen so much that people could only afford small homes today. As per Demographia International Housing Affordability Survey, house prices in Hong Kong is the most expensive in the world, from the 406 cities surveyed throughout the world. The article also quoted one housing expert, Lawrence Poon who shared something which I agree. He said, “When prices fall to a more affordable level, buyers will want to buy bigger flats, then the demand for micro-flats will fall sharply. This trend will maybe last for around one or two years because property prices are high now.” Denis Ma, head of research at real estate agency Jones Lang LaSalle said, “It’s really about budget, and the reality is that not that many people have that much spare change sitting in their back pockets. Developers are building what they believe they can sell in the market.”
When we look at these more advanced property markets, there’s much to learn. Smaller sizes would become popular because of affordability up to a point. If prices do go down, then buyers who has the same amount of cash would opt for a bigger sized unit instead. I believe this is the same for all countries unless the buyer loves being single. Do note though that if you ask me, even if I am a single, I would still think anything smaller than 500 sq ft is too small for me. My own preference would be to buy further away. Just like in Hong Kong, the further away from the island that one buys, the cheaper it gets. Another colleague needs an hour and a half to arrive at work everyday. He said that it’s okay. He could listen to music or play with his smartphone. Well, I wish my colleague all the best and hope that he could get a good place for him to start raising a family. Regardless of the country, property investment remains a necessity because the number of rooms needed would keep rising, even if the Millennial professionals choose not to buy and prefer to rent instead.
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written on 27 April 2017
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