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The cruel reality of the blue chip legend of Mei Foo Sun Chuen
Lai Chi Kok Mei Foo Sun ChuenA transaction with a book loss of HK$2.35 million was like a bombshell thrown into the Hong Kong property market. This tragic case of a two-bedroom flat in a traditional blue-chip housing estate depreciating by 30% in seven years not only reflects the structural changes in the property market after the epidemic, but also indicates that the Hong Kong real estate market is undergoing a major change that has not been seen in 30 years. When the belief that "bricks will make money" is hit by reality, this investment lesson worth 2.35 million yuan is worth every home buyer's careful reading and deep consideration.
The fate of the torch buyer
The purchase price of HK$7.8 million in 2018 coincided with the last carnival moment of the Hong Kong property market. At that time, the Centaline City Leading Index (CCL) reached a historical peak of 188.64 points, and the market was filled with an anxious and price-chasing sentiment of "the later you buy, the more expensive it will be." This transaction perfectly illustrates the "baton passing" law: buyers who enter the market when the whole nation is in a real estate frenzy often become victims of the market turning point.
It is worth noting that the rumors that the SAR government would introduce a vacancy tax at that time formed a contradictory pull with the safe-haven demand caused by the Sino-US trade war. Buyers had to deal with anxiety about currency depreciation while also bearing the risk of policy uncertainty. The wrong decisions made under this double pressure led to bitter consequences five years later. Similar situations occurred repeatedly in 1997 and 2008, proving that emotionally driven home buying decisions will eventually come at a price.
Revaluation of traditional blue chips
Mei Foo Sun ChuenTop 10 Blue Chip Housing Estates in Hong KongOne of the most important factors affecting the development of the city, it has been a weather vane for middle-class homeownership over the past forty years. However, the transaction price per square foot was only HK$10,074, which is more than 30% lower than new housing estates in the same district such as Victoria Harbour, exposing the structural weaknesses of traditional large housing estates. As the opening of the MTR Southern Link Line changes the regional landscape, new housing estates along the Tuen Ma Line continue to divert purchasing power. These old housing estates, which are more than 50 years old, are undergoing a brutal revaluation.
On a deeper level, this reflects that Hong Kong’s housing demand is undergoing a qualitative change. New generation buyers pay more attention to living facilities such as housing estate clubhouses and smart homes, and their requirements for practicality go beyond simple price per square foot calculation. When the community planning and architectural design of "old blue chips" remain in the model of the last century, their premium ability will naturally be gradually eroded by the tide of the times.
The fatal stranglehold of the interest rate cycle
During the seven years that the original owner was in charge of the cargo, the interest rate environment he experienced was characterized by epic fluctuations. From the H mortgage rate of less than 2% in 2018 to the US federal funds rate rising to 5.5% in 2023, the doubling of payment pressure has become the last straw that broke the camel's back for long-term holders. Taking this unit as an example, the mortgage repayment amount may increase by more than 60% in seven years. This "boiling frog in warm water" type of financial pressure is far more lethal than book losses.
What is even more alarming is that the balance of Hong Kong's banking system has dropped sharply from more than US$100 billion in 2018 to about US$40 billion at present. The liquidity contraction has caused the mortgage market to lose its buffer space. When the Monetary Authority followed the US pace of raising interest rates, creating a double squeeze of "interest rate + liquidity", property owners who lack the ability to hold on to their properties had no choice but to make drastic changes.
Demand gap under the immigration wave
Land RegistryData shows that the net outflow of population in Hong Kong reached 113,000 in 2022. Among them, the Sham Shui Po district, where Mei Foo Sun Chuen is located, has lost more than 5% of permanent residents in the past three years. This wave of immigration, which is mainly composed of middle-class families, has directly impacted the rigid demand base of traditional blue-chip housing estates. When the target customer base continues to be lost and the purchasing power of new immigrants cannot be replenished, price corrections caused by the imbalance between supply and demand are inevitable.
It is worth noting that the financial arrangement of immigrant families' preference for selling their properties to cash out and the cautious entry of local buyers into the market have created a "more kills more" situation. Data from the Education Bureau shows that the number of students dropping out of primary and secondary schools in the 2022/23 school year reached 27,000. This structural change in families is reshaping the real estate ecology in various communities.
Survival rules in the new normal
This bloody transaction case marks the official entry of Hong Kong's property market into the "de-mythologization" era. When the blue-chip halo fades, long-term high interest rates, and continuous population mobility become the new normal, home buyers must establish a new cognitive framework: location value needs to be dynamically evaluated, holding costs must be stress-tested, and population structure should be included in the decision-making model. Investors who still believe that "bricks will make money" will eventually become victims of market evolution. The lesson learned from the $2.35 million tuition fee may be just the opportunity for the Hong Kong property market to bid farewell to its irrational prosperity.
Mei Foo Sun ChuenMei Foo Sun ChuenHongkongKowloonLai Chi Kok, since 1982subway(nowMTR）Mei Foo StationThe property above isWang Tung ArchitectsDesigned by and managed by Huixiu Enterprises, a subsidiary of Fucheng Group. Mei Foo Sun Chuen was completed and occupied between 1968 and 1978. There are 99 residential buildings in the village, which is the residential area with the largest number of buildings in Hong Kong.Housing estate, are generally designed as two towers in one building (except No. 23 Broadway Street in Phase 1, No. 15 Nashville Road in Phase 5 and No. 46 Nashville Road in Phase 6). The rest of the towers are divided into two buildings by scissor stairs and elevators. Generally, there are 1 to 4 units per floor, providing 13,149 residential units.
