Average four-bedroom house for sale in Kowloon, Hong Kong, for $92m

Hong Kong continues to be the most expensive place in the world to buy a house, with yet another standard listing going to market for a thoroughly non-standard price.

The property at 5 Cassia Road in Yau Yat Chuen, Kowloon, has been put on the market for an eye-watering $92,434,950. So why the high price, especially on a property that doesn’t seem particularly remarkable at first glance?

Perhaps it’s the house itself? Sebastian Leung, senior director of capital markets at JLL, describes the house as a “three-storey, single building seldom seen in the market”.

“Boasting a private garden and swimming pool, the building has no shared common wall on two sides and is hence well lit,” he said in a statement. “We expect the tender will attract strong interests from end-users.”

Or maybe it has something to do with the location? The property is next to the Yau Yat Chuen Garden City Club, and is walking distance to shopping malls and a Festival Walk.

Of the area, Mr Leung said: “Yau Yat Chuen in Kowloon is a traditional luxury residential area, where luxury estates garner attention as soon as they are put on the market.”

While these two factors have certainly contributed, the real answer probably has a lot more to do with Hong Kong’s infamously expensive market.

Just last week, a CBRE report showed that Hong Kong remains the world’s most expensive housing market for the eighth year running. That report found that the average house price in the city is $1,755,515.

Last year a similarly unremarkable house with only four bedrooms and four and a half bathrooms was put to market at a staggering $618 million.

Julie Miao, a senior lecturer in property and economic development at Melbourne University, said the reason for these high prices was clear.

“The severe demand-supply imbalance is, to me, the key reason for the [rise in] housing price in Hong Kong,” she said.

Dr Miao said the demand for housing in Hong Kong had skyrocketed in recent years, and she identified four major contributing factors.

The first is an increase in population – Hong Kong’s population has increased greatly in recent years, which has resulted in a population density of more than 6000 people per square kilometre.

Next, she says the influx of business has played a major role. More specifically, the types of business people who are attracted to Hong Kong are often high-income earners, whose high purchasing power pushes prices up.

“Related to this, commercial properties are also competing with residential,” Dr Miao said. “Which could further squeeze out the latter.”

The third is an increase in tourist interest, because the purchasing power of people visiting the city has a spillover effect on house prices. And finally, local investment and speculation are big contributing factors.

She also identified several problems restricting the necessary housing supply. One of the biggest is the restriction of land supply, and the suitability of that land for housing.

“Land supply is controlled by the government, who has relied on selling land high for its public revenue,” she said. “Around 40 per cent of the government revenue, for example, is sourced from land transactions and related services.

“Within the total land supply, the composition is not optimal and surely not suitable to address housing shortage.”