Property market in Hong Kong
Hong Kong has established its real estate markets since 1841, when it became a colony of the British Empire after the First Opium War. As a small city with only an area of 1,104 square km, but over 7 millions of people, Hong Kong has one of the most prosperous property markets and which has created a huge amount of wealth.
According to Forbes list of Hong Kong billionaires 2012, the top 3 richest people and 8 out of top 11 richest people in Hong Kong are came from real estate industry. Nowadays, Hong Kong has the 3rd-most expensive real estate in the world, with an average square meter per unit pricing of US $20,371, behind only Monaco and London, according to research of Global Property Guide.
Base on the 2011 census, Hong Kong has mainly three different kinds of flats, around 30% population are living in public rental housing, around 18% population are living in subsidized sale flat, around 50% are in private housing, and remaining 2% living in other kinds of housing.
Background and history of Hong Kong Property Markets
Before 1949, early stage of Hong Kong property market
Started from 1841, the colony of Hong Kong has quickly become a regional center for doing re-exports businesses and trading with mainland China. However, due to the population size of Hong Kong was not that large before the Second World War, the property market was not very prosperous at that time.
1949 – 1980, China’s close door period
Until 1949, because of the establishment of the People’s Republic of China (PRC) and the relatively political unstable in mainland, millions of Chinese people have immigrated to Hong Kong. Some of them were entrepreneurs from Shanghai, some were well-trained professionals, and some were labor who can provide man power to Hong Kong industrialization. Because of the sudden influx of population and huge capital inflow, the demand on the Hong Kong properties has increased significantly. Even though there were some fluctuations on the price level during 1949 to 1982, say, 1970s oil crisis, but in the 30 years of China’s close door policy, Hong Kong has a significant increment on property price levels.
1981 – 1984, Property Crisis due to the issue of Hong Kong's sovereignty Due to the approach of 1997, Chinese government started the discussion of the issue of Hong Kong’s sovereignty with British government since 1981, because of the uncertainty of the “1997 problem”, a lot of people left Hong Kong and migrated to Canada, UK, Australia or New Zealand. Due to the lack of confidence to the future and unstable political environment, the property price has dropped by 60% in the period of 1981 to 1984.
1984 – 1997, Property Market Bubble
In 1984, The Sino-British Joint Declaration was signed by Mr. Zhao Ziyang, the prime minister of PRC and Ms. Margaret Thatcher, Prime minister of UK. In the declaration, “One country, two systems” principle was agreed between the UK and the PRC. The socialist system of PRC would not be practiced in the Hong Kong Special Administrative Region (HKSAR), and Hong Kong's previous capitalist system and its way of life would remain unchanged for a period of 50 years until 2047. The Joint Declaration provides that these basic policies should be stipulated in the Hong Kong Basic Law and that the socialist system and socialist policies shall not be practiced in HKSAR. The stabilized political situation has regained the confident of Hong Kong people, and more people were willing to invest in Hong Kong. Most importantly, in the Joint Declaration the Chinese and British governments agreed that the British Hong Kong government would only sell a maximum of 50 hectares a year since 1984 to 1997 (excluding land to be granted to the Hong Kong Housing Authority for public rental housing). This has capped the supply of property in Hong Kong. Started from 1990s, Hong Kong has became an international finance center, major working population has...
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