Hong Kong Property Market Slump – Should Overseas Buyers Invest in the UK?

John Brady

John Brady

RWinvest Property Writer

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House Prices Are Falling

In the past, the Hong Kong property market has been a popular investment strategy for many international buyers.

One of the world’s least affordable housing markets, Hong Kong has been renowned for being the location of some of the world’s most expensive homes for years now.

However, recent market trends are showing that the lavish highs of this market are experiencing a slump, with numerous indicators that the island’s high-flying property sector is seeing a decline that could continue into 2023.

Bloomberg is reporting that this slump is spreading across all sectors of Hong Kong’s housing market, including the coveted luxury property sector, which is seeing the lowest number of sales in nine years.

Overseas investors may see this news and begin looking for alternate locations for property investment, and one nation stands out – the UK.

In this blog, we’ll explain what negative trends Hong Kong’s property market is experiencing, and why the UK provides an alternative which is comparably strong and stable going into the new year.

House Prices in Hong Kong Are Falling At Alarming Rates

In late November 2022, the South China Morning Post reported that house prices in Hong Kong have fallen to a five-year low, with a monthly slump of 2.4% in October 2022.

While this may be good news for the general public as it means property in Hong Kong is more affordable, for investors, this is a sign of caution. Falling house prices mean you will not be able to make the most of capital appreciation.

Because of falling house prices, investors will likely begin to lose confidence in the Hong Kong property market, which is already coming true thanks to lower numbers of sales being recorded in the past few months.

Contrast this with the UK’s property market, and it is a night and day difference.

The most recent data from the UK House Price Index shows that house prices have risen by 9.5% in the past 12 months from September 2022.

This shows consistent positive growth over time and one that is set to continue into the near future.

With this in mind, you can understand why more and more foreign investors are choosing UK property to make the most of how house prices are growing so they can see a higher return on their investment over time.

Lack of Affordable Hong Kong Housing Is Hurting the Rental Market

Outside of New York, Hong Kong is one of the most expensive places to live in the world. This has caused a lack of affordable housing in the rental market, which has seen many choose to leave Hong Kong for cheaper areas.

The Guardian reported that Hong Kong’s population dropped from 7.41 million in mid-2021 to 7.29 million in mid-2022 and that the waiting list for public housing takes over six years to be allocated somewhere.

Due to high levels of rent, owning property is out of the question for many residents of Hong Kong. One estimate suggests that it takes 23 years to afford a medial-size apartment on a median income, and that’s without spending any money.

With this in mind, Hong Kong’s rental market is experiencing a similar slump to the overall housing sector as more and more people decide to leave the city for cheaper areas.

Again the UK rental market is experiencing trends that are practically the opposite of what Hong Kong is going through, with high demand for rental properties leading to rising rents across the nation.

Homelet’s Rental Index states that as of November 2022, the average rent in the UK comes to £1,175 per calendar month, a rise of 11.1% from the year before.

An increasing number of people are choosing to rent rather than buy property due to rising mortgage interest rates, which is good news for property investors as this high demand and increasing rent mean more rental income from investment properties.

The high demand from renters also results in shorter waiting times to fill investment properties, so UK investors begin earning returns on their investment portfolios sooner than if they were to invest in an unaffordable area like Hong Kong.

If you want to learn more about investing in the UK, try our free guide to foreign investment in the UK, where we break down what you can expect as an overseas investor.

One of the most popular ways of investing in UK property right now is through off-plan property developments, thanks to the falling GBP’s effects on the international market and rising interest rates meaning now is the perfect time to invest in off-plan.

RWinvest - Disclaimer
RWinvest - Disclaimer
John Brady

John Brady

John is a property writer here at RWinvest. With a close eye on property market news and updates, John writes detailed and informative articles on a range of topics that are helpful for anybody looking to invest in UK property.

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