For the most part, that's a pretty awful piece of reporting - highly subjective and full of unsubstantiated claims of a "bubble" that is about to "burst" and basically a bunch of people bleating about being unable to afford to buy a (bigger) home.
The only useful things which I saw in it were (i) the well known expectation of increased supply and (ii) the poor reception to the gateway project (and given the rest of the article, i would want to check that from other sources).
On the affordability ratio, 90% is pretty ridiculous but its not 90% of income its 90% of some adjusted income number (IIRC) but even so, I have to wonder if the statistics from 1997 were skewed somehow?
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Before 1997, you could easily flip your flat so people weren't that concrned about the monthly mortge payment. Also, the banks' record would all have been wrong as it was easier to deceive the bank. Now not possible becuse they talk to each other and there is this credit checking service.
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Ed
12 yrs ago
Banks won't lend if your ratio is 90%... Lloyd - I think you are correct - people were putting down deposits and flipping...
And load of them who got caught doing this when the market turned were trapped... they either had to follow through and complete (and be stuck underwater for a decade)... or I suppose they declared bankruptcy
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Ed
12 yrs ago
Well.l.. if the article is correct and people were putting down deposits then hoping to flip... then there surely had to be a good number of bankruptcies... because if you have to complete on a property and 90% of your income is required to service the mortgage... you are definitely bankrupt...
That said, I don't imagine the numbers would be enormous... how many people would have been caught up in such a knot... hundreds? Perhaps a thousand max?
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Could it be due to the fact that some people had multiple mortgages in their name and limited reportable income?
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Ed
12 yrs ago
You wouldn't (heaven forbid) that the HK property market is being used as a money laundry with the banks' full knowledge.... because banks (at least outside of the USA) require that you have legitimate income to support the total mortgage amount...
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