The term “nano flat” is generally understood as studio flats measuring less than 200 sq-ft in size. The proliferation of these poky quarters in earlier years was driven by tightened mortgage rules and the subsequent boiling property market.
Nano flats may be your best option when your budget is tight, especially if you are looking for a starter home for just yourself and your partner, or if you feel an urge to buy a property and stop spending money on rent. Take T-Plus in Tuen Mun as an example. In April 2021, a 131 sq-ft unit was sold at the price of HKD 2.5 million. That means the down payment could be as little as HKD 250,000 with a 90% mortgage.
Earlier years saw a buoyant demand for nano flats in the local second-hand housing market, and most nano flat buyers took just a few years to move up to bigger and more expensive homes. The market levelled off, however, with the government announcing in 2020 policy address relaxed mortgage ceiling. The maximum value of properties eligible for mortgage loans with a 90% loan-to-value (LTV) ratio borrowed by first-time homebuyers was raised from HKD 4 million to HKD 8 million. Under such new rules, buyers can set their sights on pricier, larger flats – a property that is 100 to 200 sq-ft bigger in size means only an additional HK$100,000 to 200,000 for down payment.
If you’re thinking about buying a nano flat to rent out, beware of the risk. The pandemic has pushed rents down in general so nano flats might not sound as attractive to renters as before. At a similar rent, there are better options on the market such as bigger flats, or serviced apartments that are fully furnished and equipped. Unless your nano flat ticks all the boxes – location, amenities and commuting time – it’s not easy to earn a good income from rent.
All in all, with property prices in Hong Kong remaining high in the long run, nano flats or small flats are still the first choice for many people. Whether you are investing in rentals or for yourself, the number one rule of home ownership is to always be smart with your money. When choosing a property, you should also remember to carefully select the necessary Fire Insurance for your mortgage application!
Most banks will require homeowners to purchase fire insurance before approving a mortgage, and they will also provide fire insurance to customers when they apply for a mortgage. However, many people do not know that they can choose other Fire Insurance, and they do not know that even if they already have it, they can change to another plan at any time! According to a market survey, insurance companies can charge up to 0.15% of the insured amount as premium each year, while OneDegree Fire Insurance only charges 0.03%, saving you up to 80% of the premium, learn more now!