Owning home so distant

Owning home so distant

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Hong Kong property prices have risen about 80 per cent since the 2008 global financial crisis.
Hong Kong property prices have risen about 80 per cent since the 2008 global financial crisis.
Photo: AFP

Although everyone might want to own a house, property prices are doing their best to be unhelpful, especially in Hong Kong and London. Indeed, both are among the most expensive cities to live in, with Hong Kong first and London third in Savills' 2013 report.

Supply is scarce and demand is high in both cases. While Hong Kong physically lacks the space necessary to meet supply, both Hong Kong and London are seeing prices fuelled by wealthy foreign investors and real estate developers.

While well-off people may be able to afford the place they desire, first-time buyers could be in for a long wait, or limited to renting. In Britain, the average age of first-time buyers is now 35, up from 28 in the 1980s.

Although prices are rapidly increasing, they cause fears of booms and bubbles, ready to burst at any moment. While prices have increased between 5 and 12 per cent in London year on year since 2007, Hong Kong prices increased by more than 23 per cent last year, compared with the global average of 4.3 per cent. And since the 2008 global financial crisis, Hong Kong property prices have risen by about 80 per cent.

Kenneth Rapoza of Forbes magazine states that "at these levels, if Hong Kong is not a housing bubble, then nothing is".

Both governments have introduced cooling measures, but more has to be done to protect people who are being pushed out of the market. No longer is it a case of not being able to buy the home you want, but also of being pushed out of owning a place where you want to live, which in turn increases rental demand and prices.

While the Legislative Council has put in place higher stamp duties on housing purchases to curb demand, the British government has been fast-tracking "Help-to-Buy" schemes that help first-time buyers through government-supported mortgages. The proposal has faced criticism, however, because of the risks it creates. Some argue it could push prices even higher. London Mayor Boris Johnson has also pledged to build 100,000 homes by the end of his tenure in 2016.

In both Hong Kong and London, housing prices need to be reined in to allow first-time buyers to fulfil their dreams of true ownership. Much could be gained from challenging powerful real estate developers and wealthier foreign investors and getting them to ease up a little.

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