Rocketing home prices force buyers to settle for smaller flats

Have the curbs been ineffective in bringing prices down?

During this year’s recently concluded policy address, Chief Executive C Y Leung continued to focus on housing, economic development and competitiveness in his third policy address.

According to a release from Colliers, Leung has suggested selling subsidised flats and public rental housing flats to eligible applicants. In addition, there was no indication in the Policy Address as to when the existing cooling measures will be withdrawn or lifted.

In Colliers’ view, Hong Kong residential prices continued to climb in 2014 despite various curbs imposed. Affordability of housing has become a growing issue. The selling of subsidised flats will help public housing tenants to buy their own homes.

Deteriorating affordability means homebuyers will have to compromise with smaller flats.

Here's more from Colliers:

We expect demand for primary units, especially those small-to-medium sized units, will remain strong in 2015.

Private residential prices will continue to rise this year but at a slower pace, a 3-5% growth, considering much of the end-user demand was absorbed in 2014.

Demand curbs brought in to suppress demand have had little impact on prices. As such, the existing cooling measures will remain in force despite rising supply because it is still not sufficient to meet demand.