Property in Hong Kong is among the most expensive in the world. In April, a home in the territory cost on average $2,091 per square foot, almost four times the price of property in New York, according to CBRE, the real estate services firm.
But for the past six months, Hong Kong has been in the grip of the worst political crisis in decades. Civil unrest has cost lives and pushed the economy into recession; it has shut down parts of the metro system and led to battles on the streets, as pro-democracy protesters clash with police. In recent months, demonstrators have borrowed a slogan from The Hunger Games to taunt the mainland authorities: “If we burn, you burn with us.”
Hong Kong’s homeowners are left in a state of uncertainty. Many had taken out large mortgages to buy one of the territory’s exceptionally small apartments. Now, prices in the territory — which has an estimated total housing wealth of $1.6tn — are beginning to fall.
Hong Kong has been a beacon of free trade and financial services for decades. It is home to one of the world’s largest stock exchanges and its 7.5m population includes about 650,000 expatriates as well as more than 1m mainland Chinese who have built their lives there.
If the political turmoil continues, and workers turn away from Hong Kong what will be the consequences for those homeowners?
Everything has changed
Selling homes in Hong Kong is usually easy. On a drizzly Saturday morning in early May, before the protests started, local developer Wheelock Properties offered 1,148 new homes up for sale. By 11pm, 1,001 had been sold. But circumstances now are far from normal. At a similar event in October, prospective buyers had to navigate closures on the metro system, tear gas and violent confrontations between police and pro-democracy protesters. Wheelock took 101 homes to market and sold just 20.
$1.235m The average price of a property in Hong Kong
In the past six months, property transactions across the market have dropped sharply. Between March and May, monthly transactions averaged 7,410 according to Land Registry data compiled by local estate agent Midland Realty. Between June and August, the average number of transactions was 4,649, a drop of 37 per cent. Between May and November, prices fell about 3.4 per cent, according to Midland.
There are many in the market who are prepared to sell at a discount, including expats spooked by the protests. One bank employee says he moved his family into a hotel after tear gas seeped into their apartment; another shared a photo showing a street littered with bricks, bottles and smashed signage. “This has been the viewing from my apartment block all too regularly recently,” she says.
Asian Tigers, one of Hong Kong’s biggest relocation companies, has seen inquiries from people trying to get out of the territory rise 30-40 per cent since protests began, with New York, Singapore and the UK among the most popular destinations.
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