Potential home buyers may be weeping over rising housing prices in the U.S., but it is nothing compared to buying a home in Hong Kong. Home prices in Hong Kong has hit record high values in May. This is several times more expensive than in America, making the U.S. housing market more affordable compared to other housing markets in the world.
The price of a private home in Hong Kong has been steadily rising. Since 2008, the country's home prices jumped more than 170 percent. For the month of May, the official index of overall private home prices is up 1.1 percentage points year-on-year to 298.4 points, reports Reuters. This is the second straight monthly gain for Hong Kong's housing market and marks a 20 percent increase compared to previous year.
Sales of new homes in the former British colony have also increased in the first half of the year. Reuters further reports that the boost is primarily due to low interest rates in China and abroad. This pushed cash-rich Chinese investors to spend their money in the high-end home sector, with the hope that it would yield higher returns.
Crystal Wang, an investment researcher in Hong Kong, says she would not even consider buying an apartment there. A 150-square foot apartment located in the Hong Kong Island reportedly costs HK$7,000 (approximately $900). Even if compared against housing prices in San Francisco, one of America's most expensive markets, U.S. home prices are still affordable, reports Realtor.
Research group, Demographia, recently conducted a study of more than 300 metropolitan housing markets in nine countries. The survey results showed the U.S. housing market as the most affordable, beating out Canada, the United Kingdom, Ireland, Australia, New Zealand, Singapore, Japan, and Hong Kong.
Realtor further explains that in rating affordability, Demographia researchers used a metric called "median multiples." This is the median housing price divided by median household income. In layman terms, this is the number of years worth of household income needed to purchase a home. A market is reportedly rated "unaffordable" with a calculated value of above 3.0, and "severely unaffordable" if above 5.1.
The survey shows the U.S. housing market has an average rating of 3.4, remarkably lower than Hong Kong's median multiple of 17. In starkly human terms, states Realtor, this means that "even if you could direct all your household income toward buying a house, it would take 17 years before you can afford one."