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mq, as you seem inclined to against the crowd, here be an apparent trade - short the hk property market shares
we are in a game, so might as well enjoy the gaming :0)
because the posting may not be as much fun when the market goes the other way.
as i again respond to your tesla post i play the k-pop band in background on continuous loop
accounting for perhaps 8 of the 88M views
re korea, kim and moon, and nuclear event, i must alert you that i know folks in HK who advise staying away from korean girls
of course i also know folks who advise same re women of shanghai, ukraine, … and the list goes on for some length
in fact the list is so long that we can take the easier way out, just inexorably submit to our fate and enthusiastically engage with our destiny
in the same spirit, just look at below those swept up by the yearning for salvation by redemption out of their cash, to engage w/ the goodies turned out by hong kong based manufacturing companies w/ names like shk properties, cheung kong property, henderson land, sino land, crazy land, unobtainium property …
you can almost see the crowds arms waving, tears welling up, body swaying, chanting in unison, “save us from the fed, run, devil, run"
well, anyways, when you have od-ed on run devil run, swap to repeat-loop dancing queen
makes one wonder whether the folks in north or south korea are the real koreans
what would happen when they combine - react as would matter and anti-matter, or give rise to yet another type of koreans?
back to hk real estate free market
when the market goes up, it is an expression of volition exercise when it drops, it is an opportunity the underlying law in hk is buy low sell high the overarching rule in same hk is buy high sell higher it took me 10 years to get it right and play accordingly it take some others longer :0)
Is Hong Kong’s property market heading for its biggest crash since 1997?If history is any guide,the long queues of property buyers at Hong Kong’s Tsuen Wan residential project last weekend could be the harbinger of a bubble in the world’s most expensive housing market.
Hundreds of buyers packed into Cheung Kong Property Holdings’ sales office, vying to get a unit of the Ocean Pride apartments built by Li Ka-shing, the city’s wealthiest businessman, a man whose property projects had long stood for appreciating value.
They were willing to ignore record-level prices, and mortgage rates which had just been raised the night before by four of the city’s largest banks.
Photos of long queues at the weekend and reports that broke transaction and price records one after another, have touched a nerve in Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, the city’s de facto central banker.
One who usually chooses his words carefully, Chan said the high turnout rate was reminiscent of the property market’s 1997 peak, and saw conditions that eventually led to a market crash and a six-year slump. There are risks that the property bubble may burst in the city, he said.
Nicholas Brooke,chairman of Professional Property Services Group agreed.
“There are similarities to 1997 in terms of price rises, the queuing, long upward cycle and the strong general buying momentum in the market,” Brooke said.
Still, for every prophecy of doom, there’s a believer in the upside.
“Home prices have always been high,” said Alice Shun, one of the hundreds of buyers in the queue for Ocean Pride. “I don’t think it can really ever go down from here. We have to buy property to live in them. So it doesn’t really affect our decision to buy.”
Hong Kong’s average April home prices jumped 20 per cent from a year ago, making the city the world’s most expensive residential market. The price surge surpassed the previous peaks in 2015 and in 1997, the HKMA said.
Two decades ago, the city’s hottest property was the Villa Esplanada apartment complex in Tsing Yi, a joint project of Chinese Resources, Sun Hung Kai Properties, and Cheung Kong Property. Hundreds of buyers thronged the project’s Causeway Bay sales office, going around the block.
A few months after the project’s launch, the 1997 Asian Financial Crisis arrived on Hong Kong’s shores, causing a 70 per cent collapse in home prices, and driving an estimated 100,000 home owners into negative equity. It would take six years for the market to crawl out of the slump.
The bubble is there, said Cusson Leung, managing director at JPMorgan Chase & Co.’s Asia Pacific equity research unit, who remembered the 1997 crash.
“We see the cloud hanging out there, but we are not sure when it will rain,” said Leung.
We see the cloud hanging out there, but we are not sure when it will rain To be sure, Hong Kong’s economy is at a different level today, compared with what it was in 1997, which could shield the city from a crash, even if a price correction is unavoidable.
The city’s “GDP appears to have steadied even if it is not over-exciting and interest rates remain relatively benign, with tolerance to absorb up to two, and even more, 25-basis-point increases before affordability becomes a real issue,” Brooke said.
Most importantly, loans have gotten much cheaper after 20 years, even if property prices are at their peak. The city’s average mortgage rate is 2.15 per cent, a fraction of the 11.25 per cent in 1997, according to JLL.
“The loan-to-value ratio is now 40 per cent or 50 per cent according to the new measures restricted by the HKMA,” said Joseph Tsang, managing director of JLL Hong Kong. “In 1997, buyers could borrow more than 80 per cent” of the value of their property, he said.
That means even if home prices were to plunge 50 per cent right now, no one in the city will actually find themselves in negative equity.
Hong Kong’s property market suffered another setback in 2003 when it had barely recovered from the 1997 crash, weighed down by the SARS outbreak that deterred visitors, curtailed travels and sapped economic activity.
“At the time, more than 80 per cent of buyers were flippers, who traded a number of homes. Today 80 per cent of buyers are end users,” said Tsang.
On the back of the improved GDP, lower interest rates and a better banking system, an enlarged net of buyers and growing wealth in the city over the past 20 years have helped sustain the current property boom, pointed out Nicole Wong, regional head of property research at CLSA.
The profile of Hong Kong resident buyers has also changed during this time.
“There are many Hong Kong resident permit holders coming from the mainland and they have strong balance sheets,” she said.
About 9,000 mainland students enrol as undergraduates in Hong Kong universities each year, and thousands enter through the Scheme for Mainland Talents and Professionals. They become qualified buyers once they have lived in Hong Kong for seven years.
By Wong’s estimates, this group of “Hong Kong residents” can create demand for up 30 per cent or 6,000 units of the city’s average new home supply every year.
“The net of buyers has been expanding, giving a cushion buffer to the housing market,” said Wong.
As over 50 per cent of Hong Kong’s home owners have paid off their mortgages, it is their wealth and not incomes that will fund further purchases.
“That explains why young home buyers also come with their parents when they sign the contract,” said Wong, adding that parents provided the financial back up to the new generation of buyers.
The net of buyers has been expanding, giving a cushion buffer to the housing market According to JP Morgan, the loan to deposit ratio – a measurement of banks’ liquidity by dividing total loans by total deposits – fell from 109 per cent in July 1997 to 76 per cent in April 2017.
Other supportive factors are the ample liquidity and limited supply to meet the demand.
Still, is the city’s property market invulnerable?
Yes and no, as analysts say these sound fundamentals are based on one assumption.
“This all assumes no dramatic external regional or international event, which impacts confidence to which Hong Kong has always been vulnerable,” said Brooke.
