Uptin Saiidi reports: Hong Kong was recently ranked the most expensive housing market in the world for the seventh consecutive year, according to the annual Demographia International Housing Affordability Survey.
The survey, which divides median house prices by gross annual median household income, found Hong Kong to clock in at 18.1. So, on average, if someone makes $50,000 in annual income, the cost of their home would be $900,000.
The 18.1 multiple soars above other markets around the world. The second least affordable city is Sydney which scored a multiple of 12.1. Even financial hubs London and New York pale in comparison coming in at multiples of 8.5 and 5.9 respectively.
So what makes Hong Kong so expensive?
On one hand, Hong Kong’s housing astronomical costs area a simple case of supply and demand. The city ranks as the fourth most densely populated among sovereign states or territories , with more than seven million residents spread across 1,106 square kilometers (427 sq miles).
Meanwhile, there’s high demand to live and work in one of the world’s financial hubs and the de-facto access point into the world’s most populous country, China.
Added to that, there’s very little developable land left in Hong Kong, as liveable land is squeezed between bodies of water and soaring mountains.
The land that is able to be developed is mostly controlled by the government, which offers land to developers behind the scenes by tender.
The land is selling for record amounts, increasingly to Chinese mainland developers, which in turn are likely to command record high prices for buyers for apartments and rental spaces built.
Recently, two Chinese developers paid a record $2.17 billion for a plot of residential land … (read more)