As developers in Hong Kong compete with Mainland Chinese developers for resources such as labourers and materials, construction costs increase 10% annually, with the current price HK$3,000 ($387) to HK$4,000 per square foot. This will already make the world’s most expensive city to buy homes even more costly, surpassing its last peak during the 1997 property crash.
This means good news for land developers and bad news for everyone else, as property becomes a mere commodity to be traded and speculated instead of being occupied by families. This can easily create social problems such as homelessness and urban sprawl, as well as a prospect of another property price crash like the one in 1997, as well as Japan’s infamous property bubble in the 90s, which can shatter the economy and lead to a financial crisis. The government should curb this by limiting the number of land developments per year, restrict the access of credit, as well as putting price ceiling on the prices of property.