Hong Kong is the world’s most expensive place to purchase a home because of a shortage of properties on the market, according to a study of four of the world’s top cities by real estate consultancy Savills.
Hong Kong is 55 per cent more expensive than London, based on an index published on Friday by Savills that compares the UK capital with the other cities. Moscow is 7.4 per cent more expensive than London and New York is 15 per cent cheaper.
Home prices in Hong Kong have been driven higher by record-low borrowing costs, a lack of new supply and an influx of Chinese buyers, Savills said. They have jumped more than 55 per cent since the beginning of 2009, according to an index compiled by Centaline Property Agency, Hong Kong’s biggest closely held broker.
“Prices will continue to rise over the next year to 18 months,” said Mr Simon Smith, the Hong Kong-based head of Asian real estate research.
In November, Hong Kong’s government stepped up a year-long battle to curb inflation with additional taxes and policies. Chief Executive Donald Tsang pledged to make more land available to build 20,000 housing units each year and raised property taxes to deter speculators.
Hong Kong’s “government is trying to cool the market and isn’t doing a very good job of it,” Mr Smith said.
Savills compiled the data using estimates of what employees of a company would pay to relocate to each of the four cities. The index reflects home values for one chief executive officer, two directors and four administrative workers. It based its calculations on the price per square foot for each type of property the seven buyers would purchase.
An office worker would have to pay the equivalent of about 659 pounds ($1,344) a square foot for a home in Hong Kong, 76 per cent more than their counterpart in London, the company estimates.
Seventy per cent of the Hong Kong land releases are in the New Territories, aggravating the shortage in desirable districts like Hong Kong Island, where there are only 2,400 houses, Mr Smith said.
Hong Kong also leads at the top end of the market, London-based Savills said. A home in The Peak, an exclusive neighbourhood with only 500 houses, might sell for as much as 6,353 pounds a square foot. That’s more than double the price for a comparable property in Mayfair or Knightsbridge in London, the second most expensive city for high-end homes, the Savills survey showed.
Source : Today – 28 Jan 2011