Explainer | What is the minimum size rule for Hong Kong flats and how will it affect home prices and supply?
- The 280 sq ft minimum size requirement aims to ‘strike a balance’ between regulating the market and giving developers flexibility, says development chief Michael Wong
- Smaller units with size restrictions could cost more, push first-time homebuyers towards nano flats, analysts say
The sale of Hong Kong’s first plot of land earmarked for residential flats that must be at least 280 sq ft ended in failure last week, after the government rejected bids from five major developers for the site in Tuen Mun, saying none of the offers met its reserve price.
While analysts blamed the site’s constraints and prevailing market uncertainties for the failure, public attention has been drawn to the size rule that was first introduced in December for the world’s most expensive property market.
1. Why did the government introduce this policy?
Developers in Hong Kong have been building more shoebox homes, known as “nano flats”, that can be smaller than 300 sq ft or even 200 sq ft. Many do not have an enclosed kitchen or bedroom, or a window in the bathroom. According to civic group Liber Research Community, private developers have built more than 10,000 nano flats below 260 sq ft over the past 10 years.
Developers say high property prices have forced them to build small so as to make homes affordable to more buyers.
Announcing the policy in December, Secretary for Development Michael Wong Wai-lun said the government decided to respond to people’s aspirations to live in bigger homes and require developers to build flats no smaller than 280 sq ft.
Although no bids were accepted in the Tuen Mun sale last week, the government said it would continue to impose this restriction for future sales.
