desertorchid

In my workplace in HK practically everyone has cashed out of their property investments (sometimes with profits in excess of 4-5 million HKD). No-one is seriously considering buying and their income would be in the top 1-5% in HK. They're effectively feeling priced out. Hong Kong property cannot continue to rise. The only purchases now are from people trading up/sideways having made a profit on their recent sale. The only possibilty is stable prices/ low sales for a number of years as wages inflate. This, IMO is unlikely to happen and a 20%-30% fall is nigh on certain for the next year+.

Hong Kong property prices finally gone parabolic:

Hong Kong property prices

Rises of 7-10% PER MONTH not uncommon. It is surely now too late for the government to intervene to prevent anything other than a nasty outcome for this market.

No one likes missing a profit opportunity.

But the "fear of missing out" on more profits, when property is already expensive...

Is a poor rationale IMHO, and is a typical "late stage" phenomenom.

 

Owning now looks cheaper than renting in HK - but that is only due to ultra-low interest rates.

 

HK's rates are controlled by US interest rate policy, because of the peg. Adn without the peg, I think rates would be significantly higher - probably at least 2-3%, rather than 1%.

 

I think that the HK government has not been very clever about addressing the discrepancy in growth rates - and that is unfortunately. Because I think many HK people are going to find themselves owning expensive flats when rates do rise.

What is happening in HK right now is truly astonishing. Rent is going through the roof and I am commonly hearing of rate hikes between 40-50%. Hong Kong may well be pricing itself out of the game in SE Asia as expats consider the true cost of living here. Some windfall gains i'm hearing of are eye watering. A colleagues is closing a deal this week for a 10 million HKD profit on a 7 million purchase in 2006. This is all madness and unless the government does something unpopular fast it is very likely to end in tears. But as always the question is when not if...............