Heyday of nano flats in Hong Kong may be ending, but more housing progress is needed
- With mortgage rules relaxed and more subsidised flats released, demand for small private flats has fallen, causing developers to start switching to mid-sized housing
- But for all Hongkongers to be able to ‘live bigger’, the land and housing shortage must be tackled at the root
According to the 2021 population census, Hong Kong’s per capita living space is just 172 sq ft, much smaller than Tokyo’s 210 sq ft and Singapore’s 270 sq ft. The difference is glaring when we compare it with Shenzhen’s 300 sq ft – nearly double that of ours.
Buyers snapped them up despite having to spend millions of Hong Kong dollars on a home that is often smaller than a typical car park space (130 sq ft). Ultimately, this is the consequence of the severe land and housing shortages in Hong Kong and the resulting demand-supply imbalances.
Against the backdrop of high housing prices, small flats – classed as those with a saleable floor area of 430 sq ft or below – have an edge in that they carry a lower price tag and down payment. Before the first quarter of 2020, small flats had a sell-through rate consistently above 90 per cent, a greater percentage of the small housing stock being sold than that of mid-sized units, which have a saleable floor area between 430 sq ft and 752 sq ft.
The increased supply of subsidised housing also offered a competitive alternative to small flats in the private housing market. Subsidised flats offer a larger living space for the same lump sum initial payment, and are more attractive to prospective homebuyers with a limited budget who would otherwise have to consider smaller private flats, even nano housing.
With more affordable home-ownership opportunities becoming available, more prospective buyers are expected to wait, rather than rush into the private housing market for small, even nano, flats.
There are also signs that developers are no longer so keen to build more nano flats. But the effect will be gradual as there are still units under construction that predate the minimum flat size requirement imposed by the government. Based on available sales brochures and building plans so far, we expect nano flat completions to peak this year and gradually plateau in 2024−2025.
While the heyday of small housing – including nano flats – may finally be behind us, there is still some way to go before Hong Kong can fulfil its aspirations of “living bigger”. It would require tackling the land and housing shortage at the root.
Wing Poon is policy advocacy manager at Our Hong Kong Foundation
Jason Leung is a researcher at Our Hong Kong Foundation