tedlem

What is a good stock proxy for this? I use IYR and RWR but not sure if it really reflects the reality of the US property market.

I suspect this has been in preparation for close to a month now. A possible reason for the sudden introduction is due to the hot money that was coming into Hong Kong. They Hong Kong government was intervening in the market to sell HKD for foregin currency. It is coincidental that the banks have been pushing for huge no secured loans. I have been offered close to HK$1 million ($0.8m to be more exact) by several banks. The money appears to have arrived these two weeks and the governmen noticed the large influx and was scared of what the money could do. Of course, some of this money is not necessarily from China, but they see that something (money) came into Hong Kong. Obviously, the reaction was fear of prices continuing to go up. John Tsang did mention QE3 which supports that it was US printing of money rather than Chinese. So money came in to HK via the US banking system. Chinese and Hong Kong get increases in credit. Interestingly, it appears that the Chinese buyers are being blamed. I am not sure if this will suppress prices. My guess is that it creates a damper that slowers sudden rises in prices because it creates a tax on quick sales and extends the holding period. Notice it times it to 2015 when QE3 is to keep interests low. Property prices tend to be sticky. People just hang onto it until the cost of supporting it becomes overwhelming. Furthermore, a low interest environment makes it "logical" for folks to buy than to rent. Anyone renting is sure to face a landlord that continuously increases the rent. This usually continues even into increasing interest rate environment until owners can no longer increase rents. At this point, owners start to sell. For me, I feel nothing when the rents are covering all the expenses and there is positive cash flow. So unless interest rates increase (2015), I would not feel the pain. However, the smart selling has to happen before this point in time be the stampede occurs. My guess is that some of this does hurt the local buyers (HK permanent residents). It was just last week that noticed and overheard a couple who was signing a purchase for a second property at McDonalds. It is usually the local folks who a last into the market and purchase at high prices. I also know a few Taiwnese folks who have been playing the HK market for more than 20 years. They were in early and exited last year. The point is that the smart money came in early and it is the not so smart money that arrived late. This not so smart money are usually the hardworking local resident who try to make ends meet.

It sure looks like it has this spikes when one goes into Centalines's price per sq.ft for selected areas of Hong Kong: Shatin: http://hk.centadata.com/cci/estate_info_e.aspx?id=004600 Taikoo: http://hk.centadata.com/cci/estate_info_e.aspx?id=001600 NanFung: http://hk.centadata.com/cci/estate_info_e.aspx?id=001400 But, don't know what to think of QE3 which might be announced this Thursday or perhaps a coming QE from Europe. Either it is factored in or it will have an impact on prices.

I am thinking of selling one of my rentals. Given the long long run that we have had, the HKMA squeezing financing to 50%, and all this complainting about high property prices, it might just be time to take profits instead of seeing profits taken away. It seems that it is a time when everyone are thinking property and this has driven prices to peak.