Hong Kongers Turn to UK Property as House Prices Increase Unabated

Housing unaffordability continues unabated in Hong Kong's uber-expensive property market. Image from okay.com
Housing unaffordability continues unabated in Hong Kong’s uber-expensive property market. 

It’s no secret that the housing market in Hong Kong is the world’s most expensive. Data by the Rating and Valuation Department reports that as of July this year, property prices on the island had risen for the 27th consecutive month.

According to Demographia, the average house in Hong Kong costs 19.4 times the local gross income — a clear explanation why homeownership levels in this city are among the lowest globally.

Its luxury developments, in particular,  are worth hundreds of millions, and the higher the redevelopment value of an area, the more expensive it is. The Deep Water Bay development, for instance, costs approximately £576m. Upon redevelopment, houses built on the site could fetch a whopping £13,518 psf!

The price of property in Hong Kong has been on a steep trajectory causing many Hong Kongers to look to UK property instead. Image from South China Morning Post.
The price of property in Hong Kong has been on a steep trajectory causing many Hong Kongers to look to UK property instead. Image from South China Morning Post.

Homebuyers are betting that Hong Kong’s property prices will continue their upward spiral, despite the government’s effort to tackle affordability and enable people to afford their homes.

With a population of 7.3 million and limited space, the city is facing serious housing issues. Which is why Hong Kongers have increasingly been looking to the UK property market given its relative affordability and high investment returns. In 2017, Skipton noted a 65% rise in buy-to-let mortgage completions from Hong Kong investors compared to 2016. This number seems to have increased further this year.

Skipton International is a financial institution and bank wholly owned by Skipton Building Society. Skipton offers a wide range of offshore savings accounts and mortgages for buy-to-let investments in the UK.

Interestingly, even though London remains the top investment choice for some, a growing number of Hong Kong nationals have begun casting their sights on Manchester for better investment opportunities and returns.

As a core city of the Northern Powerhouse, Manchester, as well as other northern cities like Liverpool, are major beneficiaries of the UK government’s various master plans to boost the economy. These city centres are evolving and expanding rapidly with new business districts and residential areas – enticing Hong Kong and other Asian investors.

At the moment, UK’s house prices are rising at the slowest annual rate for almost five years according to the Office for National Statistics, yet, until now, the government has failed to ensure  that housing supply meets the demand.

As Manchester and Liverpool continue developing and creating more jobs, it is expected that demand for housing will increase, thanks to the growth in internal and overseas migrants.s. Thus, big opportunities for investment into the housing sector — and its profitable returns — continue to abound.

Image Source: okay.com

 

Birmingham, the next ‘LONDON’?

Urban regeneration has transformed Birmingham into a big capital city
Urban regeneration has transformed Birmingham into a big capital city

As the world progresses into a new era and populations grow, cities, too, will evolve, transforming from nondescript outer suburbs into big capital cities, like Manchester, Liverpool, Birmingham – even Kuala Lumpur. Infrastructural growth is the main catalyst for the changes that attract migrants, causing an increment in population numbers. Thus, small cities become capital cities.

In the UK, some of the most exciting cities today in terms of population, job and infrastructural growth are Birmingham, Liverpool and Manchester.

Research compiled by Centre for Cities cites Birmingham as the second fastest growing city after Liverpool from 2002 – 2015, increasing from 9,800 to 25,800 people — 7 times faster than London over the same period. This is impressive, given how London had completely eclipsed Birmingham in the past. How the tides have changed!

Knight Frank reports that the number of people living in Birmingham will rise by 171,000 to a total of 1.3 million people by 2039, especially with the expansion of the HS2 high-speed rail line being built in central Birmingham and nearby Solihull, followed by other regeneration projects.  A sweet enticement to new investors indeed.

Birmingham: One of the Best Performing Cities in England & Wales

In the face of this renaissance, this booming city, also fondly known as “The City of A Thousand Trades” maintains its status as the heartland for British industry. The growth of the motor car as well as manufacturing continues to support the industrial sector in England and Wales,  creating more job opportunities and attracting more people — many of whom have relocated from London.

Between 1998 and 2015, job growth in Birmingham hit 30%, representing around 30,600 jobs in total.

Biggest Growth in City Centre Population & Jobs in England and Wales

Source: BirminghamLive
Source: BirminghamLive

However, despite the massive development and job growth, Birmingham is facing a shortage of housing. Between 2011 and 2016, only an estimated 8,000 new houses were built, whereas the actual demand was around 20,000.

The latest data by Hometrack shows that Birmingham is at the third place of house price growth in England, after Manchester and Liverpool, whilst London remains at the bottom.

Manchester clinched top spot at 7.4% growth, followed by Liverpool at 7.2%, and Birmingham at 6.8%. London stayed somewhat flat at only 0.7%.

The average price in Birmingham was at £161,200, slightly lower than Manchester at £166,100, and Liverpool, at £121,900.While price growth in London has been static, house prices there are more than double the national average at £494,800!

Source: Hometrack
Source: Hometrack

Clearly, cities in the Northwest received high capital gains over the last 12 months, yet there is still much room for growth.

Source: Hometrack
Source: Hometrack

The outlook for the housing market in Birmingham appears rosy, thanks to its economic growth thus far.

The region’s strong performance is mainly attributed to its manufacturing sector. In 2016, manufacturing made up 11% of employment in Birmingham, compared to the average for UK cities of 8.8%.

Due to costly house prices, as well as lesser employment opportunities, many Londoners, especially millennials, are relocating to Birmingham,and the other booming cities of Manchester and, Liverpool .

Ultimately, urban regeneration has played a vital part in these cities’ transformations, influencing the movement of millennials towards greater opportunities such as education, jobs and employment options. Savvy investors are starting to see the opportunities in store for Birmingham. Are you an investor? Are you thinking of making your money work for you? Then then you don’t want to miss out

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Malaysia’s Waning Property Market

https://www.propertyguru.com.my/property-news/2017/3/147831/malaysia-second-china

Malaysia had its fair share of ups and downs in 2017. While the overall Malaysian economy fared well throughout the year, international notoriety for the 1MDB scandal and plunging property market proved to be it’s not so subtle undoing.

According to Bank Negara Malaysia governor Muhammad Ibrahim, the ringgit did strengthen by 14.6% last year, with the upswing greatly credited to market forces. Such forces did not, however, include the property market.

The Malaysian Reserve reports that due to an excess of housing supply, economic and political concerns as well as exorbitant house prices, local high-end and low-end properties seem unlikely to recover from its fall in 2017 anytime soon.

According to National Property Information Centre (Napic), the first quarter of 2017 showed 130,690 unsold residential properties throughout the country, demonstrating the oversupply currently besetting the nation — also revealed was that the top five highest rental yields recorded last year were lower than those in 2015.

The total unsold units in Napic’s findings include overhang (completed, but unsold) units, unsold under construction units, as well as SoHo (small office/home office) units and serviced apartments.

Napic data reveals that the total number of unsold residential properties reached 130,690 -- the highest number in 10 years. Source: Napic; Image credit: http://bit.ly/2CtnTIm
Napic data reveals that the total number of unsold residential properties reached 130,690 — the highest number in 10 years. Source: Napic; Image credit: http://bit.ly/2CtnTIm

The majority of unsold housing spaces fall under the above-RM250,000 category; 83% of them, to be precise. Of this 83%, 61% of the total unsold units comprise high-rise properties, of which almost 100% were priced above RM250,000.

Housing affordability remains a primary problem in the Malaysian property market. A summary of what Affin Hwang Investment Bank Bhd analyst Loong Chee Wei told The Malaysian Reserve is as follows: the property market is far from an upturn due to the rising cost of living and the disconnect between society’s income and affordability level.

The commercial sector in Malaysia also faced a major downturn due to a glut in the market. True vacancy rates in Klang Valley malls were up to 60% in some areas, according to a Financial Times (FT) article acknowledging the country’s continued obsession with building more shopping space despite chronic oversupply.

What best illustrates the critical oversupply in Malaysia is the value of unsold and unutilised a properties which rounded off to a whopping RM35.5 billion.

Total unsold residential properties by state in Malaysia as of 1Q 2017. Source: Napic; Image credit: http://bit.ly/2CtnTIm
Total unsold residential properties by state in Malaysia as of 1Q 2017. Source: Napic; Image credit: http://bit.ly/2CtnTIm

With the previously mentioned conditions in mind, the local property market is set to welcome a buyers market. Local property investors seeking great returns would find it in their best interest to manage expectations as property sales in Malaysia are not as attractive as they used to be.

Rising Ringgit, Rising Opportunities for Investment Overseas

Public Investment Bank Bhd’s research arm has reported that Malaysia is slated to become the second fastest growing economy in Asean. The Malaysian economic outlook for 2018 and a steady growth of the local currency have opened doors for investors who are looking to leverage on flourishing property markets overseas.

The UK and Australia are home to a high-yielding, growing property market where the currency is stronger, hence rental returns and appreciation are at a higher value than the ringgit.

Moreover, these countries are home to a critical undersupply of houses unlike Malaysia, following a high population growth due to migration, job creations and educational opportunities. Furthermore, regeneration schemes that are taking place in the UK and Australia, such as the Knowledge Quarter in Liverpool and the ‘super city’ project in Melbourne, will further drive population growth.

“The UK and Australia have strong growth potential. The population and its demand for housing have grown faster than supply, causing property prices to keep appreciating. It is also because of this, that there is a strong rental market,” says property expert Virata Thaivasigamony of CSI Prop.

“With the current and forecasted performance of the ringgit, alongside the weakened pound and Australian dollar, investors now have the opportunity to invest from a position of strength. Diversifying investments is key to hedging against uncertainties both locally and globally.”