Is the Micro Flat Boom Over?

T-Plus in Tuen Mun had trouble selling its micro flats today

Is this the beginning of the end of micro flats in Hong Kong?

Back in March, demand for these tiny flats around the same area as a standard parking space (134 sq ft) garnered from HK$3 million to a whopping HK$7.86 million.

Now property developers are having trouble selling them. Today only two of the 73 units on offer at the T-Plus project in Tuen Mun were sold. The starting price for 130 sq ft was HK$2.85 million.

The plans show a number of tiny flats on each floor

With no interested buyers, the sales launch closed earlier.

One real estate agent with Midland said the result was "the worst in recent times", prompting the optimistic thought that perhaps micro flats are becoming passe.

However there's still more coming onto the market -- at least 2,100 will be completed between 2017 and 2020, or 510 units every year.

Part of the reason for the cold reception is that Hong Kong's long period of low mortgage rates ended in September, rising in line with the US Federal Reserve's tightening monetary policy. There was also the proposal to impose a vacancy tax that stopped developers from hoarding completed property to further raise prices.

As a result property prices started dropping from September, and could drop as much as 15 percent, while JLL has forecast it could plunge by as much as 25 percent if the trade war between China and the US continues.

Twin Regency offering more space for the same price

The other factor is that while T-Plus is offering flats at 128 sq ft for HK$2.85 million, a slightly bigger one at 299 sq ft at Twin Regency in Yuen Long could be had for the same price.

So -- wouldn't you be a fool for not wanting to get the latter?

And we hope this is the end of micro flats because it is mentally and physically unhealthy to be living in such a tiny space.