Hong Kong Property Prices




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ORIGINAL POST

Posted by Ed 11 yrs ago
FYI - coming soon we will have Property News for the HK market - similar to news on the home page...

COMMENTS

DaHKGKid 11 yrs ago
Great, this would be great! I'm looking for anyone who has successful received a high ratio 95% approved mortgage and what rate they were able to get.

twirly 11 yrs ago
I got a 95% loan from BoC (with about $30K cash back) at 4.775% last June.

Its down to 2.775% with the recent rate drops.


DaHKGKid 11 yrs ago
Agree with Mr. Cynical. If you have made money on property and can sell now do it to grab your profits since last fall before this occurs. Again, this is HK, when the first rat jumps they all do. Have your money ready to buy back in during the dip.


In addition to the realistic points above, look at China to somehow mess up the olympics and drive more negative news.

fel 11 yrs ago
but despite all these negative projection, it didnt look like impacting the hk property market much. Prices still remain relatively high at this moment

HKForGood 11 yrs ago
Anyway you look it at, HK apartment prices are currently over-valued. It's no surprise that price rises came to a screaching halt in 2006 when interest rates started to rise (see link below) and have boomed in the last 6-12 months with sharp drops in interest rates.


http://www.globalpropertyguide.com/Asia/Hong-Kong/Price-History


It will certainly be interesting to watch the rats jump ship once interest rates start to rise in the US (and they will).





DaHKGKid 11 yrs ago
Properties in my development, again these are upscale homes 2000-3500 sqft mix have on avg. dropped 5% over the last month prior too the fed in US stating any pressure to raise rates.

DaHKGKid 11 yrs ago
One transaction since Feb 08 whereas this house which sold last week went for 12% lower then ask.

DaHKGKid 11 yrs ago
Another transaction 28th June asking $27.7M, sold for 22.4M around 19% less.

DaHKGKid 11 yrs ago
yes walkup2 you are correct as I am focused and posting at a micro level around my plans however in studying previous data from previous slides (1982) in my development there seems to be a trend. Asking vs. Selling prices show simply the agents and owners they are dreaming and I like the wake up call and willing to post.


This again has a completely different result for high density and preferred locals you may be referring to but I do see 10-20% adjustment downward where owners will be stuck putting renters back into their properties when they cannot sell as everyone is waiting for indicators for adjustment and bottoms.


Good Luck to anyone selling right now unless they have owned the property for a very long time, getting out of real estate and waiting for the next big growth market, likely not real estate to invest their cash.

qpzmgh 10 yrs ago
sure but this is just a bit if respite in the continual and ongoing decline of the USD (and therefore the HKD)

Ted the Angry American 9 yrs ago
"Why on earth should they sell 'at a reasonable price' now if they are under no financial pressure and inflation/stagflation is just over the horizon? Also, if they sell where are they going to put their money? Ask yourselves these simple questions."


I don't know Lloyd but it's that kind of blanket assumption that gets people in trouble. More and more I am seeing folks sell their PRIMARY residence at a profit (some having bought end of last year, some taking a 2nd chance to sell). Are they wrong? Maybe (and I hope they are because I bought and I'm holding) but don't think everyone thinks the same way as you. I don't know if it's a western vs. asian thing - ie we are used to selling our primary residence only when it's time to move to a new one - but I see it happening a lot more often lately. That plus the Andy Xie article (who I respect immensely) has me more than a little concerned.

Captainscarlet 9 yrs ago
Read the SCMP 'walkup2' posted and others from the property section today too.


There are other positives for further price rises; these include:

1. Estate agents hiring more staff (they know the market)

2. Discussions of removing the HKD peg to the USD - if that happens most think holding HK assets when that happens would make you money

3. Property analysts suggesting a potential 30% further hike in prices if hot money from China continues to flood HK

4. Prices are still below their 2007 peak and around 20% below their peak 12 years ago (1997).

5. The most similar business Asian city to HK (Singapore) has in recent weeks also started to see a huge increase in property prices.

6. Lack of land and new developments - many see this as a big reason for the last couple of weeks drops in number of transactions - should also increase prices of pre owned property.


Of course, affordability, unemployment and limiting of government financial aid may also have an impact and there will always be those predicting further doom and gloom so you just need to take a balenced look and remember the HK housing market is very unlike the UK or US. On balance and assuming you don't have to sell in any downturn, buying now seems very attractive, especially with interest rates as low as 0.7/per annum!

punter 9 yrs ago
This buyer must be on "drugs" or something when he signed on the dotted lines! He's going to be sorry afterwards/leter I'm sure.

onemorething 9 yrs ago
"won't be the last one holding the tulip"


LOL :-D

Ed 9 yrs ago
It never ceases to amaze me when the media trot out these so-called experts on the property and stock markets... for every one who says its going up there's at least one who can present a logical contrarian argument...


I recall during the 97 property blast off there was a very well known property analyst who was calling for the party to roll on and on... meanwhile he was unloading his entire personal property portfolio... (I won't name him because I'd be violating our rules).


Worth noting that the SCMP is owned by one of the biggest property groups in HK so best not to treat their property comments as biblical references eh....



hongkongoldie 9 yrs ago
wow did not know that...who I wonder

maverick 9 yrs ago
Same story as stock guru - Hong Kong's Warren Buffet - advising in newspaper that Hang Seng will keep rising to 40000 at end of 2007 while at same time, unloading and cashing in on his portfolio before the crash.


Meanwhile, some young guy spreads a rumour on an internet forum about BEA and then gets arrested - how does that work?!? Suppose spreading false information in a newspaper is ok!

hongkongoldie 9 yrs ago
so will HK property prices increase over the next few years?


when will be the right time to buy?

hongkongoldie 9 yrs ago
so going up then!

Ed 9 yrs ago
Will the China property bubble pop?


Beijing, China (CNN) -- When Crystal Zhang decided to buy a house last August, it seemed like a no-brainer.


For years, she had been spending a big chunk of her salary renting a studio apartment in Beijing, where she works as a mid-level executive in a multinational company. But her landlord kept hiking the rent, so she found a second-hand apartment and plunked 640,000 RMB (nearly US$100,000) as 52 percent down payment for a new home. She now lives in a cozy, one-bedroom flat and sets aside 25 percent of her monthly salary to pay for mortgage. "I hope to pay all up in five years," says Zhang. "By then I can start making some other investments."


Zhang, 30 and single, is one of the fortunate ones. The upwardly mobile professional has ample disposable income--and a good sense of timing. In just five months since she bought her 85-square-meter apartment, it has already appreciated by 38 percent. "I'm glad I bought this one when I could still afford it, even though its price was already high," she said. "Now the price is ridiculously high."


In big cities like Beijing, the red-hot real estate market has seen prices raise more than 50 percent the past year -- six times the country's total economic growth rate. According to Shanghai Uwin, which tracks housing prices in China's richest city, average new apartment prices in the Pudong district soared by 57 percent to a record $4,061 per square meter, while overall prices in the city rose by 26 percent to $2,434.


Andy Xie, former Morgan Stanley chief economist for Asia, believes that China's real estate and stock markets are a "bubble" that will burst when inflation accelerates in 2011. "China's asset markets are a Ponzi scheme," Xie told Bloomberg. "Property is heading for one huge bust that will take a year and a half to unfold."


Even some real estate developers are getting anxious. Zhang Xin, CEO of SOHO China, agrees that the soaring prices are unsustainable, breaking ranks with other real estate tycoons. "When one gets fat, you need to cut weight" she told Forbes recently. "But this is like you haven't started losing weight yet and food is coming again."


Other analysts also see a bubble, at least in terms of affordability. "Even Chinese government statistics point to real affordability problems, with the income-to-price ratio in Beijing hovering at 1:22, when the IMF and the UN say the ideal figure is 1:3 or 1:4," said Ashley Howlett, head of China construction practice for Jones Day. "The fact is that the average people cannot afford to buy apartments in Beijing or other major cities."


Not all analysts share Xie's dire prognosis. Real estate bosses, and some economists, think there is still room for growth, assuming that China's rapid urbanization will continue.


Mei Jianping, professor of finance at the Cheung Kong Graduate School of Business in Beijing, believes that, "under the current low interest rates, the bubble is unlikely to burst, unless we have another crisis like last year or inflation suddenly surge.


"China is unique in the sense that there is nowhere for the middle class to put their money, low interest rates are low, equity markets are highly volatile, and corporate bond markets are small," Mei said. "So putting money in real estate is not all irrational."


More http://edition.cnn.com/2009/BUSINESS/12/30/china.property.bubble/index.html

narnia 9 yrs ago
Agree with walkup2. Every new development now, even those on some crowded, little smelly back street of TST, seems to have a price tag of at least $15K per square feet and thanks to them, the property market seems to have skyrocketed. It's unhealthy and I wouldn't want to be an owner of one of those flats.

Loyd Grossman is Miss Venezuela 9 yrs ago
Also agree with walkup2. To have a bubble people need to have over-borrowed - usually for a couple of years. It's a fact that people haven't overborrowed in HK so there cannot be a bubble. Prices didn't collapse during the Lehman crisis because owners had strong balances sheets. They are now starting to rise because home owners know a lot of people have savings and are demanding a hefty premium over bank valuations before they sell. If you want to buy now you can either a) pay a massive premium in the primary market (at least 50%) or a smaller premium (20% or so) in the secondary market. Bears are 'short and caught'.

onemorething 9 yrs ago
"Bears are 'short and caught'."

It is a bit difficult, if not impossible, to be short in the property market, no?

We shall see how far these savings will take us once the governments run out of other-people's-money.

Loyd Grossman is Miss Venezuela 9 yrs ago
Onemorething. Artistic licence but, although we may get a dip when rates rise, I think the chances of picking up a cheap property from a desperate seller are pretty slim. This should support prices.

HONGKONGEXPAT 9 yrs ago
I actually think that as interest rates are so low now, that even if they go up say 1% or even up by 2%, it will make little difference to the luxury market, as these guys are all so cashed up. Even the mass market with a 2% hike will not really feel too much as now the rates are so low that with a slight increase it will not have any strong impact on people's mortgages. Mind you for it to even go up say 2% will take quite a while, we may only see this beg of next year, I feel we will see max a 1% increase within this year which in a lot of cases for investors will be passed on in higher rents as the general economy grows!

Loyd Grossman is Miss Venezuela 9 yrs ago
Walkup2. I'm not familiar with thisd market. Only the mainstream mass residential.

Slammy 9 yrs ago
I've also been awaiting the outcome of this - I believe those "record" prices and the transactions are "real" once those deals have been completed.

sunvasu 8 yrs ago
hong kong property is out of range for HK peoples. Rents are rising, food cost rising but incomes are slashing day by day. Trading Business is down fall since 2008 till now can not see the recovery sign from europe and US market.


Loyd Grossman is Miss Venezuela 8 yrs ago
I wish people would stop comparing the HK property market with other countries. The restrictions on financing here are now so great that you can't get a mortgage unless you can afford to repay the debt - or lose a substantial deposit. If you want to speculate, you have to put 50% down and wait 2 years (though I think there ways around this such as changing directors and using off-shore companies - all very dodgy). HK has been very cheap for 10 years so now it will be extra expensive due to lack of sellers.

Carli_ 8 yrs ago
Hope the Government would do something...for the locals.

kiwimoa 8 yrs ago
Oly88, I'd like to know where you got the clean air from.... :)

Loyd Grossman is Miss Venezuela 8 yrs ago
Oly88. 297 sq ft at HK$5.19m is a bit steep. However, the development (i-uniq) is quite good being Sun Hung Kai and it's on the island not far from Shaukeiwan MTR and quite pleasant. It's a currency play by some rich mainlander looking for a hotel room according to SCMP. Small urban HK flats not like gold dust.

Remmy 8 yrs ago
Prices could increase 15% a year, depending on Government policy (which no-one can with certainty predict not). If the Government increased monetary supply by 15% per annum, then it would likely lead to increases that reflect this.

OffThePeak 8 yrs ago
WHAT THE DEVIL ... will happen to HK's high property prices ?


Hong Kongers are voicing their dissatisfaction by taking to the streets

Earlier this year a group of young people camped outside the offices of his offices and protesters at the 1 July march carried placards that depicted Mr Li as a devil.


AFTER THOSE PROTESTS ... there was a brief selling panic


INDICES:

Index : Latest : Previous Week Previous Month

CCLI : 98.89 : - 1.40 % : - 0.81 %

MMLI: 95.33 : - 1.56 % : - 1.27 %

[CCLI = Centa-City Leading Index]

[MMLI= Mass Centa-City Leading Index]

Announced every Friday, latest on 2011/07/15; reflecting secondary residential property price from 2011/07/04 to 2011/07/10 (based on scheduled formal sale & purchase date, where formal and preliminary S&P date has a 14-day time lag on average)

punter 7 yrs ago
This units up for sale are the "ugly" ones. But the cut in price is still quite alarming for the property bulls.

Loyd Grossman is Miss Venezuela 7 yrs ago
Punter. Not alarmed in the slightest and still bullish on HK-side property as a flight-to-quality inflation-beating trade. Developers always offer cheap deals to start off with - especially for big developments. Having said that, I'm not bullish on New Territories property (see above) as that is where the government will have to build the bulk of the new HOS flats and it is where it has sold most of the large plots. Tseung Kwan O, though, is quite a good benchmark for lower middle-class HK as the MTR line makes it very convenient for Hong Kong workers and it is also good for east Kowloon. Prices there cannot not go up sharply but they will be underpinned by underlying demand - especially in the more sought-after developments. If I have the money, I'll be interested in buying into the Sun Hung Kai development that will be going up there in about 5 years or so - inshallah.

Loyd Grossman is Miss Venezuela 7 yrs ago
Oly88. Occasionally this is bound to happen but over the long-term HK-side has to win. It's where everything is, it has the best schools and there is less land. Very few large developments apart from Taikoo Shing.

OffThePeak 7 yrs ago
"HK Island will always be more expensive than NT. But now it's what, double as expensive? I think the difference will reduce in the future, as more people move from HK to NT, so they can live in bigger housing, have cleaner air, etc. This means that buying a flat in NT rather than HK island is a better investment."


You may be missing something important here - Proximity to high-paying jobs


Highly paid bankers and lawyers work long hours, and do not want to waste precious time commuting. That's why the price of a flat in the Hong Kong SAR tends to be in inverse relationship to its commuting time to Central.


And that is also why West Kowloon is gaining on Mid-levels - it is less crowded and closer.

laiging 7 yrs ago
absolutely - proximity ot high paying jobs. may be it is a universal rule of housing prices.


In hong kong, this proximity may be quantified by amount of taxi fees.

OffThePeak 7 yrs ago
"absolutely - proximity ot high paying jobs. may be it is a universal rule of housing prices.

In hong kong, this proximity may be quantified by amount of taxi fees."

- per laiging


Or if you live in West Kowloon and work at the ICC, IFC, or in Central, by the quick and easy MTR ride, costing under HK$10. Why take a cab, when you can get there quicker and easier by MTR ?

OffThePeak 7 yrs ago
Jumping Spiders!


HK Indices now up over 3% on the year, 2012.


What were those "pros" forecasting at the beginning of the year: -10% or something?


The Data:

Week : CCLI : CMMI : RobinPl : Tregun : Dynast : Clovell / IslHarb : ParkA :

03/11 : 98.41 : 95.72 : 12,691 : 17,682 : 21,848 : 16,904 // 9,165 : 10,089 :

03/04 : 96.69 : 94.28 : 11,591 : 17,531 : 21,662 : 16,760 // 9,029 : $9,937 :

02/26 : 95.15 : 93.14 : 11,515 : 17,416 : 21,520 : 16,650 // 8,449 : $9,638 :

02/19 : 94.38 : 92.10 : 11,515 : 17,416 : 21,520 : 16,650 // 8,580 : $9,784 :

02/12 : 95.01 : 92.68 : 13,132 : 17,364 : 21,455 : 16,600 // 8,659 : $9,874 :

02/05 : 95.04 : 92,63 : 13,988 : 17,384 : 21,481 : 16,620 // 8,576 : $9,779 :

01/29 : 94.47 : 91.91 : 13,981 : 17,377 : 21,471 : 16,613 // 8,770 : $9,663 :

01/22 : 94.75 : 92.17 : 13,994 : 17,392 : 21,490 : 16,627 // 8,762 : $9,654 :

01/15 : 94.31 : 91.66 : 13,986 : 17,383 : 21,478 : 16,618 // 8,762 : $9,655 :

01/08 : 94.16 : 91.25 : 14,014 : 17,417 : 21,520 : 16,651 // 8,780 : $9,674 :

01/01 : 95.47 : 92.41 : 14,080 : 17,499 : 21,622 : 16,729 // 9,135 : 10,399 :

================

YTD :+3.1%: +3.6%

spannermonkey 7 yrs ago
right - shameless request for a sounding board. Bought a flat for 3.5mill last year and have just had an offer for 5.5. I have a tenant in there paying 21K pcm. I fully renovated the place after I bought it at a cost of around 390k. Im not desparate for the money but it seems like a good opportunity. For the wise ones here, should i accept the offer?

spannermonkey 7 yrs ago
thanks walkup. The bank V is around the 4.6-4.9 mark, so technically my 'gain' is in the order of 300-600k if i were to go back and buy the same unit for example. The reason for selling would be to hedge my other HK property which is currently rented out - basically reduce my exposure, but as you say where does one put the released capital, which would be in the order of 3.5m...

Ed 7 yrs ago
OTP - scroll up a bit... as I stated on a number of occasions the market would stabilize or increase based on the amount of money printed by Central Banks (see bad news = good news).


The Feb and ECB have printed nearly 1.5 TRILLION DOLLARS in the past quarter and pumped into the global economy. http://online.wsj.com/article/SB10001424052970203986604577252803223310964.html


To understand how much 1.5T is... try adding up the total profits of the 50 most profitable companies in the world and that doesn't even come close http://money.cnn.com/magazines/fortune/global500/2011/performers/companies/profits/


So... as long as Ben and the boys keep printing I don't see the stock or property markets collapsing...


The question is... do you believe they can keep printing forever? I believe they will try... because they have no other choice.

OffThePeak 7 yrs ago
I am not sure if I am "wise" or not - maybe time will tell.


It seems you have an eye for a bargain, so wait for the tax bite to come down from the top level, and then sell. With money in hand, you can wait for the present optimism to fade, and then buy the next bargain.


I would be interested in your formula for renovation, it seems to be working well.

spannermonkey 7 yrs ago
Well I decided to keep it in the end. The yield is great and the tenancy has >12 months to run so Im keen to maximise this low interest rate environment and bank coin. OTP, the formula is surprisingly simple yet off putting for most. I renovate to a very high standard, esp the kitchens and bathrooms and achieve record breaking rentals (highest recorded rents in the buidling) and which are always corporate or housing allowance backed - this in turn attracts investors who like the %age return and are prepared to pay the premium over the bank valuation as even with this premium (which covers my renovation costs by a factor of at least 2, up to 2.5), the yield is still better than most other investments out there right now.

OffThePeak 7 yrs ago
Hey, SpannerMonk.,

I like your formula.

Have you considered applying it to some place "on the dark side" - the Olympic/Tai Kok Tsui area?


We are starting to see more Expats and Corporate Lets in this part of the forest.

OffThePeak 7 yrs ago
The Time-from-Central FORMULA


(I thought it might be useful to place this duplicate post here, so that it would be easier to find)


1/

"My rule of thumb is:

Each minutes commute from Central takes $250-500 psf off the Valuation of a flat"


2/

"So you mean that my $6,000 psf flat in Ma On Shan would cost $30,000 psf (assuming it takes 60 minutes to go to Central)?"


You need to read more carefully, Sid.


I said:

"Each minutes commute from Central takes $250-500 psf off the Valuation"


EXAMPLE- $250 : $500

10 mins : $2,500 : $5,000

20 mins : $5,000 : $10,000

30 mins : $7,500 : $15,000

=====

40 mins : $10,000

50 mins : $12,500

60 mins : $15,000

=====


These numbers are not precise, of course. There is a flat in the property next to me that sold for over $40,000 psf, but mine might be worth maybe $12,000 psf. So the actual valuation depends to the View, the Size, the decoration etc.


But if you examine the Centaline data carefully, you will observe this sort of pattern.


Also, once you get to a commute beyond 20-30 minutes, the amount you lose per minute tends to decline. Those beyond 30 minutes, I am using only the $250 per minute column only.

OffThePeak 7 yrs ago
For a new or newish flat, a return over 4% may be hard to acheive.


For an older flat, that is not so difficult

traineeinvestor 7 yrs ago
By the time you allow for vacancies, management fees, rates and govt rent, repairs, taxes and long and short term maintenance, there isn't a whole lot of yield left unless you go for really poor quality property.


If anyone can suggest reasonable areas or buildings where a genuine yield above 4 percent (net of everything) can be obtained, I'd be interested.

OffThePeak 7 yrs ago
In my own experience of owning over a half dozen flats, all that, cost a little more than 1%, and maybe up to 1.5%, allowing for voids.

traineeinvestor 7 yrs ago
@walkup4


Are those very small apartments really a good investment? I have to admit to being a bit skeptical about the potential for something which is really only suitable for a single person or a couple on a tight budget (neither of whom makes for the most stable of tenants in my experience). Sure, the low purchase price makes it comparatively easy to stump up enough cash to close the deal but, personally, I'd prefer to invest in something where I can at least turn around without putting my elbow through the window.

Loyd Grossman is Miss Venezuela 7 yrs ago
For Mid-levels/SOHO, your absolute minimum is 450 sq ft gross assuming a decent lay-out. Between 500-600 sq ft is optimum for a decent, young professional unless you are in a classy building. Otherwise you risk leasing to chancers and fly by-nights.

traineeinvestor 7 yrs ago
@ walkup4 - thanks. Have you ever looked at any of the really old run down buildings? The sort that developers target for redevelopment?

traineeinvestor 7 yrs ago
Still pretty expensive for what it is. If I was in that area, I'd rather walk accross the road and buy in Hollywood Terrace - more bang for the buck.

traineeinvestor 7 yrs ago
Hollywood Terrace is older building that Center Stage (about 13 years - I think) and was built by the HS (although for private sale not HOS purposes). I used to live there and thought the units were actually pretty good - decent layout, good ceiling height and a decent sized kitchen. The common areas are not as good as Centre Stage.


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