REA Group '2018 H1 Hong Kong Property Market Perspective Survey' Survey Announcement

DREAMS ON HOLD: 27% of Hong Kong people are convinced that they will not be able to afford a property in Hong Kong in their lifetime

LOVE DELAYED: Marriage plans postponed due to high property prices

NANO IS THE NEW NORMAL: 'Nano flats' become the new favourite of the market 

LOOKING ELSEWHERE: Hong Kong people set their sights on overseas properties

HONG KONG, March 29, 2018 /PRNewswire/ -- In recent years, owning a property has become an indicator of success for many people in Hong Kong, with a growing number of young students already planning ahead to own property. In the past few years, high property prices have become one of the top concerns for Hong Kong people. Last month, the Rating and Valuation Department announced that the Property Price Index, as of January 2018, rose to 357.5 points for the 22nd consecutive month, establishing a record high for the city.^[1] REA Group, the market-leading digital media business specializing in property, announced the survey results of the '2018 H1 Hong Kong Property Market Perspective Survey' earlier this month. Results from the survey showed that many people in Hong Kong are convinced that they will not be able to afford a property in their lifetime, as property prices are too high. Excessively high property prices have become an obstacle to buying property and at the same time, it is delaying Hong Kong people's marriage plans. Moreover, findings also signified an emerging trend of 'nano flats' gradually becoming a new favourite in the real estate market, and an increasing number of Hong Kong people turning to overseas properties as property prices continue to surge in the city.

Ms. Kerry Wong, Chief Executive Officer, Greater China Region, REA Group (middle) and Ms. Nerida Conisbee, Chief Economist, REA Group (left) in a group photo with the Ms. Anita Wong, Head of Consumer Insights, Nielsen Hong Kong (Right)

Ms. Kerry Wong, Chief Executive Officer, Greater China Region, REA Group, believes that the findings of the survey are extremely valuable to the Hong Kong real estate industry as it provides important insights into Hong Kong people's sentiment toward the city's property market. She said 'Hong Kong's property market has not weakened, and demand remains high. REA Group has conducted a survey on the outlook of the real estate market every six months since in 2012. In order to gain a deeper understanding of the public's perception of the Hong Kong property market and their willingness to invest in property, we have deliberately devoted more resources this year to commission Nielsen, a world-renowned performance management company, to conduct a the '2018 H1 Hong Kong Property Market Perspective Survey' survey via an online questionnaire from January 29 to February 10, 2018, which successfully interviewed 1,003 people. We hope that the results of this survey will enable the industry to accurately grasp market changes as well as the needs of the public.'

Dreams unfulfilled due to high property prices

95% of respondents believe that the current residential property value in Hong Kong is excessively high, while nearly 70% (69%) believe that it will continue to rise in the next six months, with the average expected percentage increase at nearly 10% (9.8%). Only 20% of respondents would consider purchasing property in Hong Kong in the next 12 months with the median budget at more than HK$6 million ($6,540,000). The survey indicated that among the 40% of respondents who do not own a property, almost 30% (27%) are convinced that they will not be able to afford a residential property in Hong Kong in their lifetime. Another 16% have no plans to purchase property in Hong Kong at all.

Ms. Nerida Conisbee, Chief Economist, REA Group, said 'The high-priced property market situation in Hong Kong continues and there has been no noticeable short-term decline. According to figures released by the Census and Statistics Department, the median monthly salary of employed individuals in the fourth quarter of last year, excluding domestic helpers, was HK$17,200[2]. Taking the survey respondents' median property purchase budget into account, a typical Hongkonger must utilize the equivalent of about 30 years' worth of their monthly income to purchase a HK$6 million property. Due to rising property prices, graduates in recent years have cited purchasing a property as a dream rather than a standard step in life. The fact that many respondents admitted that they do not think they will be able to afford to buy their own property in their lifetime definitely deserves everyone's attention.'

Property market outlook affects marriage plans and 'nano flats' become a new favourite of the market

Among unmarried respondents, 55% believe high property prices influence their marriage plans. Among these respondents, 34% are considering the alternative of leaving Hong Kong. Additionally, near 50% (48%) of respondents who plan to purchase property in Hong Kong would consider purchasing 'nano flats' provided that the price is reasonable; of these, 30% of 'nano flat' purchases will be used for self-occupation and 25% will be for investment purposes.

Ms. Nerida Conisbee, Chief Economist, REA Group, added 'I believe that most people in Hong Kong prefer to have their own nest with their other half at the time of marriage. In recent years, whether you own a property has become a significant piece of criteria to determine whether you are an eligible, desirable spouse. Subsequently, respondents inevitably feel that property prices have an impact on their marriage plans. Hong Kong people who are affected by high property prices are attracted by the new 'nano flat' trend. A 'nano flat' is a unit with less than 200 square feet of saleable area. Because of their small sizes, prices of 'nano flats' are naturally lower than regular units, meaning that bearing the cost is less of a strain on Hong Kong people. We foresee that 'nano flats' will increase in popularity in the future, as they are generally more affordable. In addition, those who plan to purchase a 'nano flat' for investment purposes should be aware of the market trend as we can expect an increase in supply of these flats.

Hong Kong people attracted to overseas properties with China, Japan and Thailand the top choices for emigration

14% of respondents said they will purchase overseas properties in the next 12 months, with over half of them (58%) citing good investment value as the main reason for their decision, while 38% made the choice due to Hong Kong's high property prices. These respondents selected Mainland China (42%), Japan (26%) and Thailand (19%) as their destinations for their next property purchase.

Ms. Nerida Conisbee, Chief Economist, REA Group, noted 'Purchasing properties overseas has become an option in recent years for Hong Kong people, many of whom believe that the return rate of foreign investment is higher than that of Hong Kong and that the entry threshold is lower than that of local properties. As for these foreign investments, Mainland China is in close proximity to Hong Kong, while Japan and Thailand are popular tourist destinations for Hong Kong people and we can foresee more and more Hong Kong people purchasing properties in these countries in the future. As more Hong Kong people invest in overseas properties, we advise that they pay attention to the quality of these properties, do adequate risk assessments and seek appropriate professional advice to avoid unnecessary losses.'

This is the Group's seventh consecutive year conducting the survey on the outlook of the local real estate market. Ms. Kerry Wong, Chief Executive Officer, Greater China Region, REA Group stated 'This is the 13th survey conducted by the REA Group since 2012. The survey allows us to better comprehend the needs and intentions of homebuyers, thus gain insights on how the Group's property searching platform can be improved. According to the survey findings, we can see that Hong Kong people will face more challenges due to high property prices. As a leading real-estate multimedia search platform, REA Group will continue to play a key role in catering to the needs of aspiring Hong Kong homeowners and will strive to provide real-time and holistic real estate information. Customers can search for the best properties that suit their needs on the website while at the same time, gain insights on the real estate outlook and market trends.'

About REA Group

REA Group Limited ACN 068 349 066 (ASX:REA) ("REA Group") is a multinational digital advertising business specializing in property. REA Group operates Australia's leading residential and commercial property websites, realestate.com.au and realcommercial.com.au, Chinese property site myfun.com and a number of property portals in Asia via its ownership of the iProperty Group. REA Group also has a significant shareholding in US-based Move, Inc and PropTiger in India.

Within Hong Kong, REA Group Asia operates GoHome.com.hk, squarefoot.com.hk and SMART Expo. The brands aim to provide consumers with extensive local and overseas property news, listings and investment opportunities while offering property and home-related advertisers with a one-stop, multi-platform solution

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