Rental prices for residential properties hit a four-year high. Is it the best time to enter the market?
Hong Kong’s high property prices have always been well-known, and in 2023, it has topped the list as the “least affordable city for housing” for the 13th consecutive year.
In the past, it was common for rental prices to be lower than mortgage payments, but recent reports indicate that local residential rents have been continuously rising, reaching a four-year high.
Prospective homebuyers who have saved enough for a down payment are naturally eager to take advantage of the situation where rental prices are higher than mortgage payments.
However, as a savvy buyer, it is advisable to first consider the returns and risks before deciding on the right timing to enter the market.
Renting out a property vs. fixed deposits?
Assuming you already own a property for self-occupation and have a few million dollars for investment, should you use it as a down payment for an investment property or keep it in the bank as fixed deposits?
Don’t be trapped by the old thinking pattern that “buying bricks with money is the most practical.” Whether or not to buy a property and rent it out depends on the rental yield.
Taking an example of an 80% mortgage for the property, the decision should be based on the rental yield being higher than the expenses of owning the property, as per the current rental market conditions.
If you still need to subsidize after receiving rental income, then you should consider whether there are other investment portfolios that offer more stable or higher returns before you commit to purchase a property for investment.
Note that different properties are influenced by factors such as their age, location, and various aspects such as whether they are affected by building structural safety, and nearby amenities.
Whether for self-occupation or rental purposes, it is important not to make decisions solely based on the rising trend of residential rents in the market.
Instead, customize an investment plan that suits your preferred property and financial situation.
Disclaimer：The content of this webpage is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial circumstances.
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