Hong Kong, the world's most expensive housing market, just got even pricier

The world’s priciest housing market got even more expensive in the second quarter.

Hong Kong’s housing affordability ratio, which measures the proportion of income spent on mortgages, worsened to about 67 per cent for the April-June quarter, the government said on Friday, up from 56 per cent in the year-earlier period.

The latest figures underscore the challenges that Hong Kong’s incoming leader, chief executive Carrie Lam, faces in taming home prices in a city where it now takes a household 18 years of median income to buy a home, according to data from Demographia.

Compared with the 1997 peak, overall flat prices in June were 94 per cent higher, according to government data.

The number of residential transactions surged 43 per cent to 18,892 in the second quarter, fuelling rising prices. Centaline Property’s Centa-City Leading Index of existing home prices surged to a record high 160.3 July 30.

The index has climbed 11 per cent this year, and has jumped more than 50 per cent in the past five years.

Overall, the economy expanded 1 per cent in the second quarter from the previous three months, more than the forecast 0.6 per cent rise.

Earlier this month Ms Lam said she was “very concerned” about the growing disparity between incomes and property prices.

“The increase in salaries cannot catch up with the increase in property prices,” Lam said.

She has vowed to push ahead with a scheme that will build homes targeted at local middle-class first-home buyers priced out of the market.

This story was first published by Bloomberg.

With Fairfax Media

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