If Chief Executive Donald Tsang Yam-kuen goes live on radio after his policy address on Wednesday, history may repeat itself and this could once again be the most challenging question he has to tackle.
This time last year, a young doctor complained to Tsang during a phone-in radio programme after the policy address that despite their qualifications and salaries, she and her lawyer boyfriend could not afford to buy a flat.
Responding, Tsang said: "From what I can see, properties are still affordable for Hong Kong people, like two professionals in your case. If you just read the newspaper, you can find plenty of flats selling for HK$4,000 per square foot."
A year on, and that statement is true for only small flats in outlying areas such as the New Territories. Closer to the city centre, prices are more like HK$6,500 per square foot.
In the popular locations of Kowloon and on Hong Kong Island, prices have risen sharply since Tsang went to air last year.
In Hong Kong Island's Western district, for example, a 355 sqft flat at Belcher Court, a 25-year-old block in Kennedy Town, is on offer at HK$2.28 million or HK$6,422 per square foot.
That is 30 per cent higher than similar-sized flats in the New Territories, where units in City One Shatin — one of the most popular housing estates — are on offer at about HK$4,877 per square foot, well above the HK$4,000 entry-level benchmark presented by Tsang last year.
"It is true that last year you could still find flats selling for HK$4,000 per square foot in some locations in Kowloon East. Amoy Gardens and Tak Bo Garden in Kowloon Bay were among them," said Patrick Chow Moon-kit, the head of research at Ricacorp Properties.
"But prices in these estates have since risen to between HK$4,300 and HK$4,800 and choices are much more limited than a year ago."
Across the 50 major housing estates monitored by the property agency, average prices were up by 15.4% at HK$5,584 per square foot at the end of last month from HK$4,838 a year ago. By comparison, average salaries rose just 1.4% last year and 2.9% this year.
If buyers are limited by their budgets to flats selling for HK$4,000 per square foot, they could consider older and smaller flats at Tai Wo Centre in Tai Po, Dawning Views in Fanling, Sea Crest Villa in Sham Tseng and the housing estates in Tuen Mun, Chow said.
Another prospect would be Caribbean Coast, the estate in Tung Chung that is furthest from the Lantau new town's MTR station.
"New developments in Yuen Long such as Yoho Town will be out of their budget. The average price of Yoho Town has jumped to HK$4,840 per square foot. But flats in other housing estates are still available," Chow said.
Sammy Po Siu-ming, a director of Midland Realty in the New Territories, said each generation of buyers faced the same challenge and it was never easy to buy a first home.
"Property prices were lower in the 1980s when I planned to buy my first apartment," Po said. "But the average salary was also far below the current level.
"Many couples had to use half their combined salaries to pay their mortgages and it was just as difficult then for young people to buy flats."
He said people should nonetheless buy a flat if their job was secure and they had the money to make the 30% down payment.
"Prices of 395 sqft flats at City One Shatin have risen to HK$1.9 million. But the monthly mortgage payment is about HK$6,000, which is below the average monthly rent of HK$7,000," Po said.
"If you have the money to make the down payment, it is worth buying rather than renting."
Buyers with lower budgets should look for units in Yuen Long and Tuen Mun, he said, where prices in second-tier housing estates ranged between HK$2,000 and HK$3,000 per square foot.
Those low prices reflected the remoteness of the estates and inadequate transport, but transport links had since improved, he said. "It now takes 20 to 30 minutes only from Yuen Long and Tuen Mun to Central by rail."
Given the low interest rates, Po expects property prices will rise 5% to 10% in the fourth quarter.
Willy Liu Wai-keung, a managing director at Ricacorp, echoed these positive sentiments, forecasting that mass residential prices could increase 15% to 20% in the next 12 months.
"People should figure out whether they must own a property or not. If they have to own a property, they have to face the reality that property prices have risen to a high level," Liu said. "Even if the government releases new cooling measures, it will only slow down the growth in prices. It will not make the price trend turn downwards."
Professor Eddie Hui Chi-man, of Polytechnic University's building and real estate department, expects property prices will continue to rise in the next six months.
But prices would begin to drop six months later when interest rates increased, Hui said.
In the circumstances it might be sensible to rent now, rather than buy, he said. "The government is likely to increase land supply, which will slow the growth in property prices. Buyers may have to pay more if they enter the market now," he said. — South China Morning Post
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