Rental yields in Hong Kong in June rose to their highest level in more than 13 years, fuelled by strong leasing demand from mainland Chinese students, even as falling mortgage costs made property ownership more affordable compared with renting, according to Centaline Property.
The Centaline Rental Index Yields, which tracks residential rental yield, rose for a second consecutive month to 3.56 per cent in June, the highest since November 2011, according to data released on Monday by one of the city’s largest property agencies. Yields rose 3.54 per cent in May.
The higher rental yields created the biggest gap between yields and mortgage rates in nearly 14 years at 1.58 percentage points, Centaline said, making it cheaper to buy than rent in almost all parts of the city. The average mortgage rate on loans linked to the Hong Kong interbank offered rate (Hibor) was 1.98 per cent, according to the property agency.
About 98 per cent of the 143 housing estates tracked by Centaline showed higher rental yields than mortgage costs in June, compared with 93 per cent a month earlier. Thirty estates delivered yields of 4 per cent or higher, one more than in May, the data showed.
“Hong Kong’s rental yields have entered a rare high-growth phase amid the influx of student tenants this summer,” said Yeung Ming-yee, a senior associate director at Centaline. “While yields are likely to stay elevated above 3.56 per cent, the pace of growth could moderate as home prices edge higher.”
