Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Saturday, Jun 03, 2023

Nano flats’ heyday in Hong Kong may be ending, but more housing progress needed

Nano flats’ heyday in Hong Kong may be ending, but more housing progress needed

With mortgage rules relaxed and more subsidised flats released, demand for small private flats has fallen, causing developers to start switching to mid-sized housing. But for all Hongkongers to be able to ‘live bigger’, the land and housing shortage must be tackled at the root.
As “Asia’s World City”, Hong Kong is renowned for its high efficiency, which stems in part from its high-density development. But this also comes with shortcomings – epitomised by the city’s shoebox housing units and a residential property market that is the least affordable in the world.

According to the 2021 population census, Hong Kong’s per capita living space is just 172 sq ft, much smaller than Tokyo’s 210 sq ft and Singapore’s 270 sq ft. The difference is glaring when we compare it with Shenzhen’s 300 sq ft – nearly double that of ours.

Hong Kong’s high housing prices have had a significant impact on market behaviour in recent years, most prominently the building of nano flats, some measuring only 128 sq ft – the tiniest flats earned themselves the nickname “king-size bed” units.

Buyers snapped them up despite having to spend millions of Hong Kong dollars on a home that is often smaller than a typical car park space (130 sq ft). Ultimately, this is the consequence of the severe land and housing shortages in Hong Kong and the resulting demand-supply imbalances.

But there are encouraging signs. The government is clearly setting out to improve living space, and market dynamics are shifting. It seems first-time homeowners are no longer scrambling for any unit that requires a smaller lump sum initial payment – no matter how small the flat – just to get a foot on the property ladder.

Against the backdrop of high housing prices, small flats – classed as those with a saleable floor area of 430 sq ft or below – have an edge in that they carry a lower price tag and down payment. Before the first quarter of 2020, small flats had a sell-through rate consistently above 90 per cent, a greater percentage of the small housing stock being sold than that of mid-sized units, which have a saleable floor area between 430 sq ft and 752 sq ft.

The relaxation of mortgage rules in October 2019, and again last February, was a game-changer, making it easier for homebuyers to get mortgages for pricier flats. With the down payment required substantially lowered, buyers’ ability to afford and appetite for larger units were boosted. This is reflected in the sell-through rates, for which mid-sized flats overtook small flats in the second quarter of 2020, a trend that has continued.

The increased supply of subsidised housing also offered a competitive alternative to small flats in the private housing market. Subsidised flats offer a larger living space for the same lump sum initial payment, and are more attractive to prospective homebuyers with a limited budget who would otherwise have to consider smaller private flats, even nano housing.

The impact was evident. The sell-through rate for small flats fell during and immediately after the apartment selection process for the sale of Home Ownership Scheme flats in 2019 and 2020, suggesting that purchasing power was drawn away from small and nano flats towards subsidised housing.

With more affordable home-ownership opportunities becoming available, more prospective buyers are expected to wait, rather than rush into the private housing market for small, even nano, flats.

Moreover, the government has made clear its intention to improve living space by introducing a minimum flat size of 280 sq ft in December 2021 and extending this rule to all private homes in February 2022. Together with the above-mentioned favourable demand and supply factors, changes are gradually feeding through from the sales phase to the upstream design and construction stage.

Last year, 9,881 small flats were built, making up 47 per cent of the private housing completed. Based on our analysis of the latest sales brochures and building plans, we expect the percentage of small flats built to peak this year, with mid-sized housing forming the bulk of completions after 2024.

There are also signs that developers are no longer so keen to build more nano flats. But the effect will be gradual as there are still units under construction that predate the minimum flat size requirement imposed by the government. Based on available sales brochures and building plans so far, we expect nano flat completions to peak this year and gradually plateau in 2024−2025.

While the heyday of small housing – including nano flats – may finally be behind us, there is still some way to go before Hong Kong can fulfil its aspirations of “living bigger”. It would require tackling the land and housing shortage at the root.

The government must strictly adhere to its housing supply strategy and press on with major land development projects such as the Kau Yi Chau artificial islands and the Northern Metropolis. These will provide a solid foundation for a better quality of life, worthy of Hong Kong’s standing as a vibrant and global metropolis.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

Hong Kong News
Close
0:00
0:00
The driver has been described by authorities as a 21-year-old woman from Tallahassee
Joe Biden falls at the Air Force Graduation
America's Got Talent…
Elon Musk has been showered with praise by the Chinese public during his trip to China
Nvidia Joins Tech Giants as First Chipmaker to Reach $1 Trillion Valuation
Drone Attack on Moscow's Wealthiest Neighborhoods Suspected to be Launched by Ukraine
Elon Musk Meets Chinese Finance Minister in Beijing
AI ‘extinction’ should be same priority as nuclear war – experts
Chinese fighter jet buzzes U.S. Air Force spy plane over South China Sea
Prominent Hacker Forum RaidForums Suffers Substantial Data Breach
Nvidia CEO Huang says firms, individuals without AI expertise will be left behind
WPP Revolutionizes Advertising with NVIDIA's AI Powerhouse
Two US Employees Fired For Chasing Robbers Out Of Store As They Broke ''Company Policy''
Pfizer, the EU, and disappearing ink - Smoke, Mirrors, and the Billion-Dose Pfizer Vaccine Deal: EU's 'Open Secret
The Sussexes' Royal Rebound: Could Harry and Meghan Markle Return to the UK?
A provocative study suggests: Left-Wing Extremism and its Unsettling Connection to Psychopathy and Narcissism
Neuralink Receives FDA Approval for First-in-Human Clinical Study
Ukrainian Intelligence Official Admits to Assassination Attempts on Putin
WATCH THIS: democracy in Russia is so bad!
Ed Davey: It is possible for a woman to have a penis
Bernard Arnault Loses $11.2 Billion in One Day as Investors Fear Slowdown in US Growth Will Reduce Demand for Luxury Products
Russian’s Wagner Group leader: “I am not a chef, I am a butcher. Russia is in danger of a revolution like in 1917.”
TikTok Sues Montana Over Law Banning the App
Ron DeSantis Jumps Into 2024 Presidential Race, Setting Up Showdown With Trump
Steve Jobs introducing Apple's iPhone, exactly 16 years ago.
Banking Behemoth vs Ex-Boss: The PMorgan-Epstein Entanglement
China overtakes Japan as world's top car exporter
Talks between US House Republicans and President Biden's Democratic administration on raising the federal government's $31.4tn debt ceiling have paused
Biden Administration Eyeing High-Profile Visits to China: The Biden Administration is heating things up by looking into setting up a series of top-level visits to Beijing by top officials in the coming months
New evidence in special counsel probe may undercut Trump’s claim documents he took were automatically declassified
A French court of appeals confirmed former President Nicolas Sarkozy's three-year jail term for corruption and influence peddling
Debt Ceiling Crises Have Unleashed Political Chaos
Weibao Wang, a former software engineer at Apple, was charged with stealing trade secrets related to autonomous systems, including self-driving cars
Mobile phone giant Vodafone to cut 11,000 jobs globally over three years as new boss says its performance not good enough
Elon Musk compares George Soros to Magneto, the supervillain from the Marvel Comics series.
Warren Buffett Sells TSMC Shares Over Concerns About Taiwan's Stability
New Study Finds That Secondary Bacterial Pneumonia Is a Major Cause of Death in COVID-19 Patients Who Require Ventilator Assistance
The official tapes of Trump's deposition in the E. Jean Carroll battery (rape) and defamation case have been released.
King Charles III being crowned.
Newly released video of Donald Trump’s rape trial deposition:
Video: Ukraine MP Punches Russian Representative At Global Meet
El Paso mayor has declared a state of emergency
Russia accused Ukraine of attacking the Kremlin with drones in an attempt to kill Putin
Dutch court orders man who fathered 550 kids to stop donating sperm
Kim Kardashian Lookalike Christina Ashten Dies Of Cardiac Arrest, Hours After Plastic Surgery
Samsung has banned employees from using generative AI services such as ChatGPT
'Godfather Of AI' Geoffrey Hinton Quits Google To Warn Of The Tech's Dangers
A Real woman
Vermont Man Charged with Stalking After Secretly Tracking Woman with Apple AirTag
Elon Musk Statements About Tesla Autopilot Could Be 'Deepfakes,' Lawyers Claim. Judge Evette Pennypacker Does Not Understand How Far and Advanced This Technology Became
×