Posted by
tsuiwah
17 yrs ago
Our second two-year lease in HK is about to end. After the first lease, our rent went up more than 50% (but for a bigger space). For our current search, our rent is probably going up another 50% if we are lucky.
I realise that property values and rents are going up due to low interest rates and low supply, but if rents go up too much, then at some point demand will have to drop, perhaps because people are leaving HK. Just can't figure out if that point has been reached yet.
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Things can get worse, it was much worse during the run up to the handover, there was a luxury property up at the peak which was valued over 200 million and its offer price kept increasing on a weekly basis by 20 million at the very height of insanity. Though that was a luxury property it was symptomatic of the rest of the market back then in general and sentiment, purchase prices and derived rental values were spiking out of control, and to be honest back then demand was not curtailed, because the region in general had grown so spectacularly in the previous decade.
Personally I dont see demand dropping because of price rises, it did not during the pre handover boom, and I dont see it happening now, though circumstances are different but I do see the beginning of interest rate tightening which should bring valuations down, though I dont know whether that will trickle into rental prices.
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six
17 yrs ago
i've heard that rents are starting to come back down. for a start banks aren't prepared to throw money around like they used to - so flats are sitting empty for longer. there are currently a lot of empty flats in our building... one would think empty flats would lead to lower rents (well in a normal world anyway).
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"one would think empty flats would lead to lower rents (well in a normal world anyway)."
Indeed. In HK, though, it is all about sticker price. They might not negotiate the rent down very much, but they'll throw in a bunch of extras like better appliances, new kitchen.
As for rents still moving up, yepp I think they are at least here on South Side.
Leaving HK due to rents? I'm sure lots of people do. If HK finds itself challenged as the financial center of the Far East, rents will drop. Currently that is not really happening. Perhaps we will see a slow down in rent increases due to the worldwide economy issues. However the Far East economies haven't been affected nearly as much as Europe or North America. So who knows?
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I over heard quite a few times that in the local market many believe that prices of rent go up mainly because of the olympic games. I don't see the relevance but still it's something that people believe in. Would be interesting to see how prices will be in about 3 months from now.
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HK is not only Hong kong island side. Rental is more affordable in many areas as long as you are willing to travel within 1 hour travel time. Anyway, this level of travel time is usually standard in most major cities.
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Our rent went up 30%. We are off the island and the landlord was actually after a 40% increase. I do think we had bit of a bargain before but this has certainly contributed to our decision to leave HK, as incomes are in no way keeping up put pollution it the biggest factor in our decision to leave. Coming from NZ there is just no way HK can ever come close so after 3.5 years its time to get back to the real world.
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You mean a world which you feel offers you a better quality of life and or standard of living rather than the real world. For those people who are born or brought up in Hong Kong, it is the real world.
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No, I'm leaving HK because of the pollution. You can't put a price on clean air and water.
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"HK is not only Hong kong island side. Rental is more affordable in many areas as long as you are willing to travel within 1 hour travel time. Anyway, this level of travel time is usually standard in most major cities."
The fact that rents are lower in NT doesn't change the discussion at all.
"For those people who are born or brought up in Hong Kong, it is the real world."
Not that I was brought up here, but I do agree with this statement. You can't say that somewhere else is the "real world" and HK is not.
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Is the pollution really killing the people in HK (or just the expats)?
HK ranks 6th at the longest life expectancy at birth in the world (avg 81.77).
Singapore 4th (81.89)
NZ 17th (avg 80.24)
UK 37th (avg 78.5)
US 47th (avg 78.14)
Source CIA World Fact Book
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2102rank.html
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ranti
17 yrs ago
It is a fact of life that HK is an expensive place to find accomodations......will people move away because of it? Definitely. Amongst a list of other reasons for moving.
I have lived here over 12yrs......starting to think about moving back to Canada. Not for myself, but for the kids. When we take our son to the park and the air quality is not that good, the next day he is coughing. I also feel a bit lethargic after a day out in crappy air.
THIS Cannot be good.....
Making money and saving it is actually easier here than back home especially with low taxes, but when rents are like this, it makes it harder. The bubble is going back down......just a matter of time.
HK gov really does not help matters...all talk no action about spreading the revenue base beyond reliance on property sales and transactions as primary source.
My guess is that about 10 years from now, when HK's edge over the mainland has diminished (rule of law, stable gov, well-educated ppl, etc etc), property prices/rent will be closer to those on the mainland. LOWER and not so crazy.
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There are just so many highly paid bankers here to push up the rents in a lot of desirable areas.
Recently I know of colleagues who started moving to areas outside of midlevels and the peak. You can more reasonable rents but you need to dig around
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International companies (usually) send the best and brightest to an overseas posting. Companies will lose out, if their best return or refuse to come to HK. Not because of the company's poor decisions, but rather becuase HK is too expensive or the pollution is killing their staff.
All the new staff arrivals in HK haven't yet experienced the pollution we will have next year. The rain and wind is helping now, but just wait...
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Girl
17 yrs ago
We are moving - actually, we are downsizing and moving to a different area. Sheung Wan - very modern flat, in an area undergoing a bit of a rennaissance.
For the short time that we are going to be in HK, I can certainly forgo a bit of space for the greater long term good.
And, also to not put too much of my hard earned $$ in the hands of greedy landlords.
I am not a typical "Expat", my rent is not being paid for by my company - *sigh*
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I would be very hesitant to call the current scenario a bubble. You are not seeing luxury property prices increase in values by 10% a week as was the case with some back during the pre 97 bubble. Basically we have a low interest rate environment, and there is pent up demand, property prices were either falling or stagnant for about 8 years post the crash. Many legitimate buyers like newly weds or families looking to own their own homes had deferred their purchases until the market stabilised creating some pent up demand, once interest rates started falling and prices became buoyant again voila you get these kind of increases. Its not surprising that this would happen, supply especially on the island is so limited any increase in demand is going to have a magnified effect on prices
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I am inclined to side with the pessimists here. The pessimists sound more realistic, a global slowdown in economic growth, a housing meltdown in the US and fading competetiveness of HK. I fail to understand how exuberance takes control over basic economics. A few of my pals have already left HK for several reasons but mainly because they weren't able to save as much as they did earlier. I happened to drive over to Clear Water bay area which I have been freqenting for years, the number of ADS outside village houses for RENT/SALE has quadrapled in the last few months, and so have the prices and guess what, the supply too has gone up in the recent years.....the basics of economics only point towards one direction.....use a low gear
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I would tend to agree, I see rate rises by the end of they year and prices coming down, but I would hesitate to call this a bubble. That implies that speculators are driving demand and therefore price increases, and my feeling is like with the market for crude oil, though there is speculation built in to the price, genuine demand is what is and has caused the price rises we have seen.
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there is a great article in the SCMP today in the main section on page 15 which seems to agree with the majority here that the property market in HK is on the verge of a crash.
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Ed
17 yrs ago
Saw that this morning - its called Apocalypse Soon by Andy Xie... interesting read... I was looking for it on a free online source so we could link News to this but cant find... It will likely show up online on free news site in the next few days.
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Ed, here it is, I am sorry if its too long to post here, but I hope it benefits all....
The troubles at Fannie Mae and Freddie Mac, the USsemi-government lenders that hold or guarantee US$5.4 trillion of mortgages, have exposed the innermost sanctum of the credit-cum-property world of the past decade. They have lent their semi-government credit ratings to dubious financial products that purport to decrease financial risks by reshuffling the deck. While government money will bail them out, they will cease to be the sugar daddies for Wall Street. The leverage bubble has nowhere to hide; it will explode.
Rising leverage was the tide that carried all asset prices upwards. In Hong Kong, London, Mumbai or New York, rising property prices became the reason for prosperity, and this prosperity was the rationale for the rising prices. As one Hong Kongtycoon told me, wealth begets wealth; people who make money in the stock market buy property, people who make money in the property market buy stocks, and the happy story goes on and on. Yet, the free lunch was an illusion. Its engine was the debt pyramid game.
The bricks for the pyramid were new financial products that purported to decrease risk for owning assets and, hence, required less capital for their purchase. The rising price trend validated the power of the financial innovations for several years. In fact, the rising trend was due to the belief in the new products that created a demand boom for risk assets with debt financing. Like any bubble before, this one fell under its own weight. As a bubble grows, it needs proportionally more money to stay afloat. At some point, there isn't enough to keep it rising. The ensuing rush for the exit reverses the momentum. The way down is usually much steeper than the way up.
Rising oil prices are an accelerator for the downturn. Money is reallocated from most bubble cities to oil exporters. The money reduction sucks the air out of the bubble. To fight the receding tide, central banks are printing money to slow the descent. But more money leads to higher oil prices, sterilising the central banks' efforts. Further, high oil prices depress economies and decrease investor confidence. The central banks are fighting a losing battle against falling asset prices and are fuelling stagflation. The inflation will take years to cure. The central banks are digging their own graves.
Investors should sell any asset that has benefited from rising leverage. Property is entering a bear market everywhere except among oil-exporting countries. All else being equal, while inflation is good for property, the current price is already too inflated to be supported by inflation. While the consumer price index rises, property prices fall. At some point, the ratio of the two returns to the historical norm and the bubble is fully deflated. On that basis, property prices may fall by one-third globally, and by half in many "hot" cities.
Hong Kong's property market is triply vulnerable. First, the city's economy depends on its stock market. That is falling. Local speculators made billions from mainland IPOs and they splashed out on luxury properties. The wealth spillover from the stock market boom was the driving force for the property market.
Expanding financial sector employment was another spillover. As investment banks expanded their payrolls on the dream of endless hot Chinese IPOs, many bankers got their big bonuses. But the hot IPOs of yesteryear are now underwater. Loss-bitten investors are not re-entering the market. Those bankers lucky enough to keep their jobs have no expectations of a bonus. This is definitely not the time to splash millions on a luxury property that is actually a modest-sized concrete box.
Second, the US Federal Reserve is likely to raise interest rates after the November election. USinflation is becoming entrenched. The Fed is caught between financial and price stability. Every time it tries to sound tough on inflation, another financial explosion forces it to loosen the money supply again, sparking more commodity speculation.
Next year, the explosions may cease and the Fed may be able to switch to fighting inflation: it may raise interest rates to 5 per cent in the second half of the year. As adjustable-rate mortgages dominate Hong Kong's property financing, the massive rise could hit investors or speculators hard. The default rate could spike.
Third, China's economic cycle is turning down but inflation is staying up. In particular, Guangdongfaces a serious downturn. Its export economy is being hit hard on rising costs and falling demand. What is happening to Macau's casino business shows how a lack of money in Guangdongcould affect its neighbours. At the same time, inflation means that Guangdongwill charge Hong Kongmore for its goods and services. Hong Kongwill get less money from, but pay more to, its neighbour.
The triple squeeze may imply one of the worst years, next year, for Hong Kongproperty. During the current bubble, the mass market hasn't inflated dramatically. The pain from the massive price decline between 1997 and 2003, plus sluggish income, has prevented mass hysteria in the property market this time. Those with money to spare ramped up the "luxury" market. Citing negative real interest rates, too many people - mostly financial professionals who may lose their jobs soon - have maximised leverage for property purchases in the past two years. The prices at many well-known developments have tripled since 2003.
Hong Kong's luxury property price may fall by 50 per cent from its peak. It is not too late to sell. An offer may be significantly lower than you expect. But you should take it. The big fall is yet to come.
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Ed
17 yrs ago
A related thread (and the most popular in the history of this site with over 6000 views...)
http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/114674/hong-kong-property-market-correction?/
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I agree with DB that this is not a bubble. I just bought a small flat and took a look at the selling history of it. It is small and is in the N.T. so might not be relevant for most of you. But just take it as an example .....Now is 1.4M but it was 2.2 before 97. It is very normal for prices to be corrected at times and 10 years is just the right number in our Chinese saying. The lending pattern in the U.K. (I dont know about the US) is very different to that in HK. My step-son in U.K. got a mortgage successfully when he did not havea full time job and I think that wld be quite unlikely to happen in Hong Kong. Banks here are still very conservative. So I dont think the same type of credit crunch will happen in Hong Kong. But definitely property prices will come down to a certain extent.
Someone mentioned before that rents wl come down after the Olympics. Yes rents will come down due to the supply/demand rule but I dont think the Olympics has got anything to do with it. There are 2 main hotels in Shatin. Although room charges in the Royal P*** is still on the higher end, that is not at all the case as in River****. It is only HK$400 per night for August and that explains, in my opinion, the Olympics has not got much effect on things here in Hong Kong. Mind you River**** is supposed to be the base for journalists/reporters when the horse olympics takes place.
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Whether or not Central Banks in the west or in the developing nations have been printing too much money or not, the Era of credit expansion is dead. And I think one would be making a horrendous mistake if confused by the temporary drying up of credit. Its by no means temporary, for a very long time these bruised financial institutions will only be taking care of their wounds, and this would get worsened by increasing cost of credit and inflation would be the reason for that. And I think that is Andy's point. If the levered assets were to be unlevered or liquidated, obviously it would lead to accelerated asset price deflation. I would agree with that...if I understand him correctly.
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How do you see consumer prices deflating, when oil prices keep rising along with food prices in tandem. Inflation is occurring in every economy to varying degree, what evidence do you have or what data suggests that deflation is going to occur
http://www.bloomberg.com/apps/news?pid=20601087&sid=acm2_4j.NiZE&refer=home
The US
http://www.economist.com/world/la/displaystory.cfm?story_id=11707341
South America
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/exclusions/hubpages/outlook2008two/shsbc.xml
Europe
http://www.reuters.com/article/ousiv/idUSHKG27391820080625
Asia
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Do not need to leave HK - but leave HK island & go other area. I think Macau is an option for people who does not need to go to office or wants to have large space & does not mind paying around HKD 300 a day - that is only 6000 if you are working 20 days a month. You can have over 2000 sqf place at 20K easy!
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Yeah, but then you'd be living in...Macau.
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DB> One reason I dont really rely on media for forming my views is that media is reporting what has happened already, yes oil has gone from $27 to $147 in 5 years, and there are strong fundamentals to back that, such as increasing demand, production at its peak, OPEC control/cartel and there is no denying to the fact US has led its hand by destablizing the middle east. However, my view is futuristic. All this will change just like we have seen cycles even in the price of oil if we look behind in the distant past. My reasoning is that when oil comes to a level where it starts to hurt beneath the belt ie. corporate earnings, financial markets, leading to poverty, there will be slack in consumption. 1998-2003 era of deflation was probably the best this generation saw. It was productive, earnings grew, wages grew, balance sheets grew, there was sweet growth, do you see that now? As for the main question whether expats will leave HK if the rent continue rising at the same pace as the last few years, I have no doubt in my mind, they will leave....maybe the companies will move too...to greener and more economical pastures.
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Reporting last quarter inflation figures and then predicting the current quarter or annual rate is hardly the distant past. You can look to the future and say the price will go down if prices have risen substantially already, that is not exactly crystal ball gazing or rocket science. When prices move precipitously in one direction, it is easy to say they will eventually move in the opposing direction sometime in the future, the only time that means anything is if you can accurately predict when.
Oil prices will inevitably reduce, but not because corporate profits have been hit and this somehow results less demand, India is adding 1000 new cars to its road daily and I don't see that changing because Citi, or GE are having a bad year. When oil prices do fall, It will be because the persistent high price has done its job as a signal and has had the required effect on societies consumption and production habits, increased energy efficiency (both amongst consumers and industry), migration towards alternatives and increased investment in exploration, that is what will happen when oil prices hit below the belt and that is what will reduce demand.
1998-2003 was a period of deflation for South East Asia more accurately Hong Kong was where prices were falling, there was low or benign inflation in most other parts of the globe.
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onemorething There are two types of inflation one is cost push the other is demand pull, the latter is what you refer to when you say there is a scarcity,
http://www.investopedia.com/terms/c/costpushinflation.asp
http://www.investopedia.com/terms/d/demandpullinflation.asp
I disagree with whether that is actually occurring, you seem to have this obsession with there needing to be a wage price spiral for there to be genuine inflation, though a wage price spiral is perhaps the foremost reason why inflation persists for extended periods of time, it is not a necessity for workers inflation expectations to be positive therefore governing future wage negotiations for inflation to occur in the first place. If raw material prices rise so to will the cost of final goods and services and there is inflation, if these input prices continue to rise for extended periods of time as they have for the past 5 years, then inflation will persist, and if it persist for a long enough period of time, there will eventually be a wage price spiral as workers begin to work inflation expectations into their future contract negotiations. but it is by no means a necessity.
http://en.wikipedia.org/wiki/Built-in_inflation
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Not long ago, HK property bubble burst leaving only about 30% air in the balloon, 70% air escaped the balloon. Reason (well, one of the reasons) - consumer who is mostly a borrower for the purpose of buying property in HK was led to believe that prices cannot come down. Surprisingly after the balloon burst a lot of buyers admitted they bought in fear more than greed. Both - greed and fear are dangerous when you are engaging in high value purchases that too through leveraging/borrowing. This time around, I believe, the credit bubble will disseminate about 200% of the air, and why? because the balloon was inflated with 200% air in the first place. I dont have figures to support my percentage but I can give you an example, when Bear Stearns burst it was reported that its balance sheet was 13 times levered. That means it had exposure of 13 times its actual realizable asset base.
As for the cars being added on the roads, your figure may well be accurate, but I can tell you from the stock performance of the auto companies that this isnt going in any direction that you would like to see. In fact I am waiting for cars starting to disappear from some roads. As to when, if I knew, wont I be the richest man in the world?
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I am not sure what your point about leverage has to do with anything, Every financial institution in the world undertakes leverage, that is the business they are in, that is what they do, and how they make money. If there is a run on a bank that is because there is a crisis of confidence amongst creditors or depositors that the bank will not be able to meet its obligations, which occurs usually because there is a perception that the financial institution has taken poor risks and is unable as a result to obtain financing.
Your point about the deflation of the property asset bubble, so what you are saying is that in 2003 when property prices in Hong Kong were at rock bottom compared to 1997, they were still over valued. Surely not??
US car companies stock prices may be falling and they may be making losses, but that is due to legacy labour contracts and the high cost of health care benefits they pay out to their unionised labour force, along with their dependence on gas guzzling models like SUV's when energy conservation is the trend amongst consumers. Transplant factories in the US with non unionised labour from companies like Toyota and Honda who have invested in designing conservative cars are doing very well. If you look at Japanese car makers or emerging market car makers like Tata or Skoda, or Cherry in China, their sales are still increasing year on year, profits are still up and if their share prices have fallen, it is due to the broader market has fallen, and not due to any weakness in profitability.
so in effect what you are saying is that property and energy prices will eventually decline but you don't know when. I am not disagreeing with you, but that really doesn't offer a lot. Cars disappearing seems highly unlikely. Petrol driven cars perhaps, but certainly not cars in general, more of them will use alternative fuels in the future, but as a product they are here to stay.
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"Leaving HK due to pollution, better school facilities, cost of rental in terms of space factor. In that order."
There's schools and schools. Private schools here seem great, and they are relatively inexpensive compared to the UK or the US.
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Agree, pollution is my biggest concern. One can always live in an area with lower rents and commute, one cannot escape the air pollution
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We are leaving at the end of August, after being here 13 years. It is no longer worth it. The pollution, noise and general living conditions are the reasons for leaving.
I used to think that the money and tax was great and would set me up for a lifetime, but I am now concerned the only lifetime being set up, is in a hospital. Who knows how my life may be after living here. We have to be careful about our food; vegetables, chicken, fish, maybe the water, pork somtimes, it's just getting worse.
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"Surely something has to give, surely the HK market cannot grow forever. "
It can, over longer periods. However you are correct that over shorter periods there are frequently corrections.
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I think we are looking at a situation where buyers are holding out for better prices and sellers don't need to sell (which is why the secondary market is flat). Rents are going up because people are choosing to rent rather than buy and also because of inflation. Property should go up because we have already had a massive recession. people that hold flats at the moment are probably under no pressure to sell. If you are planning on staying more than 4 years, maybe you should think about buying. The interest rates are very low and they would still be low if they went up by 500bp. In international terms, the flats are cheap because of the weak US$.
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My wife and I are also leaving for the same reasons as Bob the Builder - basically poor living conditions, poor air, noise and stress which lead to poor health - which has already reared it's ugly head the past few years.
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I think somewhere in the western side of hk such as sai yin pun area is not a bad option especially to those who need to stay in hk for a longer term since the rents are a lot more resonable and if you are lucky enough you can find some sea view apartments for half the price of what I paid in the central area.
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"You have to weigh up what is important to you, clean air versus increacing violence and murders,... "
Actually, Hong Kong has got one of the lowest murder rates in the world. It is lower than NZ - not that NZ crime is high by any means.
Here is a site with some statistics: http://www.nationmaster.com/graph/cri_mur_percap-crime-murders-per-capita
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"Actually, Hong Kong has got one of the lowest murder rates in the world. It is lower than NZ - not that NZ crime is high by any means."
That's exactly what Big Pete was saying.
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Oh, ok. :} I misunderstood.
Having said that, NZ has hardly got a skyrocketing murder rate.
As a good South African, I get offended when people from other countries claim to have higher crime stats than us!
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I just moved to Singapore and although rents have also gone up a lot here, it is not as expensive as HK and you get a lot more value for your money. If you asked me three years ago if I would move to Singapore, I would say no but I'm happy to be here in a decent flat for a lot less than HK. It was definitely worth the more. I'm in a 1,100 net sq ft 3 bdrm condo with a huge pool, 2 tennis courts and gym next to the MRT line for HK$20K per month! Tell me where you can find that in HK??
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Laguna city, you might pay a bit more for 1100 sq ft but not that much and it has more than 2 swimming pools a gym, not sure about tennis courts, but on the MTR line as well
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Lomax
17 yrs ago
These are the facts there was a cross the board sacking of 300 Hong Kong Real Estate employee's.
ReaL Estate agents when you have a good one hold onto them for a year now I have been toying with buying and renting,The scumBags real estate agents give you the ongoing mantra that prices are set to keep on rising...rubbish they have started to drop if you can deal with the owners direct do so and you don't have to pay an agents fee...I have just rented in clearwater bay a duplex orginally 35,000 we have sign for $23,200 one year fix 2nd year open.I will buy and stuff the agents,Look at October and after olmpics things will be back in our favour,Oh and any agent that uses the word exclusive look for another agent.We deal in inclusive only thats management and rates and car parks,And freshly painted and upgrades.Hold tight keep looking.Agents are rats and only deal in NET Sizes Gross sizes are cheats.I have been showed apartments supposed 1200 sqft get there Net is only 700.....take the power out of their hands...By the way I meet with the owner and I nego the price...good Luck you don't begg someone to take your money
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Lomax, how did you get your hands on such a sweet deal with your clear water bay apartment? I have spent a couple of days with the agents and as you correctly pointed out, they have been rather dodgy, just want to know how to go about it. The listings on Asia expat for village homes is very limited. I also browsed a site www.iland.com.hk but its for buying only.
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Actually, 'iLand' is a property agency in Sai Kung (though they probably also have a physical address in Clearwater Bay, too). We found a good deal through them, but only after looking for months and pretty much exhausting the agent. It's always better if you can deal with the landlord directly, but sometimes it's hard to find them.
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Freezingpan, I meant to clarify that they do handle rentals - though it wasn't clear in my last posting. We used them for a rental.
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deliran...thanks, i visited the page again, found two lisitings, a 2000 sqft. house for HK$100k/month and a 700 sqft. floor for 18k/month. Its quite a dollar distance from what Lomax paid for 2 floors (guessing 1400 sqft.) ie. 23k/month. The disparity is so glaring that I am scared calling this agent.
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If you do want to pursue it, I would go in person to the agency. State the price you want to pay and keep insisting on it, as the agents will almost always tell you that there are very few rentals available at that price. It took us months of looking at places that were inappropriate before we found something. Sorry to sound pessimistic, but on a brighter note, in the end we did find a place that suited our budget, location and space requirements - so obviously it's feasible. We have a place that is about 1000 sqft, above Sai Kung town itself (Po Lo Che), with lots of outdoor space, car parking, close to transport and under $15,000. If you want more info, you could PM me. Good luck.
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Nope, have left HK because of the pollution. Love HK for we grown-ups, and our 12 year old has escaped the worst of it; but when our (now 6 yr old) had become asthmatic, and myself also when the air quality is at its worst it was time to call it quits. Left in January and miss everything desperately, but it is absolutely worth it when our boys spend hours outdoors; both have grown 4 inches in the 6 months we have been here (in Australia) and although life isn't perfect (no help! crime!) I know we have done the best thing for our family.
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"both have grown 4 inches in the 6 months we have been here (in Australia)"
While I can understand your reasons for leaving, I seriously doubt their growth is due to lack of pollution.
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To be honest that is a little bit of a silly notion. I mean I am glad your children are enjoying life more and having less breathing difficulties, but growth spurts happen in children at different times through out their lives and for different reasons and have nothing to do with the amount of pollution they face/
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A friend has recently relocated to HK and managed to negotiate 15-20% reduction on the asking rent on their final selection of 3 apartments (14K-18K range). This certainly would not have happened 6 or so months ago so I believe the tide could be turning slowly but surely.
I am leaving my current rental next week as my landlord has bumped it up from 15K to approx 25K in 3 years and now has it advertised for 35K (2 bd, 800 sq foot in mid-levels) and then wishes to sell it. Needless to say, not one person has come to view the apartment over the past 4 weeks ...
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it is not a good sign for sure. i am sure i will hold my idea of buying an apartment until another 6 months at least.
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"Yes, the management is great too, immediate reaction when there is a problem. HK landlords, please take some lessons from this."
That's all well and good, but our HK landlord is very responsive. If there's a problem there's someone fixing it within a couple of hours at most. I have sometimes mentioned to a guard that I have a leaky faucet and after a few hours the bell rings.
So they're not all bad.
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You can't get away from simply supply and demand economics. If too many HK apartments stand open for too long, the rent will come down.
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What about buying. My sister has been trying to buy a property in Sydney for almost a year, and for the last year there has been much talk of a correction in prices, and she hasn't been able to get a look in to even see a property leave alone buy one and benefit from a correction in prices. People seem to be able to sit indefinitely when the market moves against them and when you are on a mortgage I am not sure how so.
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"People seem to be able to sit indefinitely when the market moves against them and when you are on a mortgage I am not sure how so."
Well, speaking as a property owner with a mortgage in a down market. ;) The mortgage amount didn't change and we could afford it before. As long as there is no big loss of income we can keep paying. We could of course unload the property now but if we keep our cool and wait a few years the market will come back up and we can sell at a better price point.
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Call me boring but i've been tracking properties for rent listed on Asiaxpat as a crude way of tracking market sentiment to see if a glut is forming.
Here are my findings:
In March 2008 there were 850 properties listed. And this is a normal level.
Beginning of July 2008 there were 1045 properties listed. 23% increase from March.
2 weeks ago there were 1574 properties listed. 51% increase from beginning of July and 85% increase from March 08.
Last week there were 1671 properties listed. 5.8% increase from 2 weeks previous.
This week there are 1875 properties listed. 12.2% increase on the week!
Whilst this is only on a small scale this will be happening across HK property agents. Huge oversupply. Rents are coming down !!
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Having plans to live in HK for several more years, our contract with our landlord expiring soon and increasing rent in our area, we just decided to buy! We were able to get a really good bargain on our new flat (bought flat below bank valuation) and good low mortgage too. With a sound market a few years from now, hopefully property prices will go up again as projected. :)
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fair enough if you can afford the mortgage payments but a lot of people buy to let and if rental values are falling and interest rates are rising it doesn't make for a pretty picture. You would think you would get a look in at seeing what is on the market, but in Sydney according to my sister not a peep.
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"fair enough if you can afford the mortgage payments but a lot of people buy to let and if rental values are falling and interest rates are rising it doesn't make for a pretty picture."
Not a pretty picture indeed. But I must say a lot of people don't do any contingency planning. You can't just assume interest rates will be unchanged and values will go up in the short term.
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Kiz27
17 yrs ago
On the clean air thing, Christchurch in NZ has one of the worst air pollution levels of any developed city in the world... NZ also has one of the highest rates of asthma in the world, particularly in children. Also in many places internal air pollution is sky high, NZ has particularly bad rates in winter with gas heaters and wood fires... so have a look at the real statistics of places before you make judgements on the effects of air pollution. There are reasons why the rates of sickness are so high in places like australia and new zealand (like skin diseases, allergies and asthma) just because it looks pretty doesn't actually mean it is good for you.
I'm not saying the pollution in Hong Kong isn't bad, and should be improved. It is something that urgently needs to be addressed. I'm just saying a lot of people have an inflated idea of how wonderful their home country is in terms of real health benefits.
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Where are you getting your data from?? You honestly wouldn't know that watching LOTR!!!, but I would like to see the data source because if true talk about a misconception.
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Time's list of world's most polluted cities. HK doesn't even qualify.
* Linfen, China
* Tianying, China
* Sukinda, India
* Vapi, India
* La Oroya, Peru
* Dzerzhinsk, Russia
* Norilsk, Russia
* Chernobyl, Ukraine
* Sumgayit, Azerbaijan
* Kabwe, Zambia
http://www.time.com/time/specials/2007/0,28757,1661031,00.html
"You honestly wouldn't know that watching LOTR!!!"
Well, LOTR was not filmed in a city. ;)
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you would think that chernobyl would be a little bit higher up the list, I mean they only had a nuclear meltdown there. what does that say about the cities that are more polluted
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black smoke spewing coal based power plants. I wouldnt be surprised if people woke up every day to find their houses covered in black soot.
Hong Kong aint that bad at all ! And No, I am not leaving HK due to rents, am pestering my company to increase my allowance !
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I wanted to point out that I think HK air could be cleaner. But it all need to be put in perspective. My friend, who has lived in HK and Beijing, always loved coming back to the "clean air of HK".
"you would think that chernobyl would be a little bit higher up the list, I mean they only had a nuclear meltdown there. what does that say about the cities that are more polluted"
No kidding. But to be fair I don't know if they ranked them internally.
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Goo
17 yrs ago
Hey qpzmgh, thanks for the market analysis. I'm going to present your findings to my landlord when he tries to raise my rent in a few months. It might help :)
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Goo for it!!!
Also i reckon in a few months/towards the end of the year your landlord will be lowering his rent without you even having to negotiate.
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There is no standard method of measuring air polution. Too many different types of gasses with different effects on the environment/health makes it very dificult to determine exactly which area has more polution than another.
However, according to the World Bank Statistics, the most 10 populated cities seem to be the same as Time's list. Here's some more detailed data from the World Bank: http://siteresources.worldbank.org/DATASTATISTICS/Resources/table3_13.pdf
You'd have to be pretty bored to read thru that actually.
Anyway, HK has the 2nd highest life expectancy in the world. In fact it is just better than Iceland, a country with very little polution.
UN life expectancy: http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy#List_by_the_United_Nations_.28average_for_the_2005-2010_period.29
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Are rents for mass market properties expensive by international standards, especially when compared to rents in Europe in US$ terms? Also, if interest rates go up by 500bp it will still be cheaper than in 1997 when everyone was paying Prime + 1.75%. Obviously if people can't afford to pay the rent then rents will fall. Rents are just like seats that need to be filled on aircraft. If the economy is bad then they have to fall but inflation is 6% and this is in an economy which doesn't have high energy costs. Also, most current landlords have weathered the Asian crisis and they are most likely to be quite strong financially. Yes, they buy to rent but often with a 30% cash deposit to back them up. Tenants have had quite a good deal for the past 5 years but the economy is back - just look at the numbers that spill out of bars in Wyndham St. That was a ghost-town 5 years ago.
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Not on the topic of rents exactly but some of the comments made earlier.
Life expectancy has traditionally been one of the highest in HK because of the traditional way of living (diet & exercise of the old generations) and especially because people traditionally took Chinese Medicine herbs over the course of their lives and therefore strengthened their systems against many diseases.
This is all rapidly changing though with the young generations adopting the common western lifestyles and diets. They are also forgoing the traditional TCM methods for the seemingly more convenient western medicine.
And if anyone was wondering, lung cancer is the most prevalent cancer in HK. Followed by colon cancer. Guess why.
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Arrived in Hong Kong 18 months ago and rented an 1100'' apartment in Central (SOHO) for 32K. 4 months ago my landlord wanted to increase the rent to 65K due to the lower unit went for the 60K. It was absolutely crazy!.... and people has been telling me that in HK, we do not have a choice.
I've been comptemplating moving to NT for awhile back then but was worried about the transport and other issues of being away from central. The rental increase was the last straw, I took the plunge and moved to NT 3 months ago and brought a car for the commute. Looking back now, my quality of life has greatly improved and is actually enjoying the real HK where one has the option of choosing a laid-back weekend or going out in the City.
The funny thing is, I'm paying less now even with the rental, car expenses and toll charges added together.... It's paid to think out of the box.
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The other thing about living in Soho, is you can't seem to get away from the bars, if you have been out on the lash the night before, that last thing you want to do when you walk out your house first thing is to see another bar or walk into the very place you were in the night before. It is convenient but it costs to much money the novelty wears of very quickly and I found it very hard to relax.
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Just an option: For a 1052 sq ft. flat at Island Harbourview connected to the Olympic Station MTR, you can bargain for 25 to 28K HKD with Clubhouse facilities. Your bldg is also connected by indoor bridges to the mall if the rain or heat bothers you.
Friends in Tung Chung area pay around 13-14K for 1200 sq ft flats with club house facilities and malls connected to the MTR.
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600', $7,200 K, 2-minutes from MTR. Cheaper rents are out there, or maybe I'm just lucky. Property agents are sometimes really upfront about who they are working for. I tried looking for a flat in Tung Chung this summer and the property agent asked me when I would start renting. When I told him I wasn't in a hurry, that I needed the flat in about a month, he claimed that no owner would agree to show the flat unless I said I wanted it in two weeks or less. How stupid do they think people are? Just lie, folks, and say you want the flat tomorrow. They always try to twist your arm in every conceivable way. The agents will always ask you where you have looked for other flats, how much, etcetera. If you tell them you found another that isn't too expensive they will struggle to come up with something bad to say about it like "Oh, so far away. So inconvenient." It's also annoying how they will call you a million times, often as late as 11pm, to try to pressure you into paying a deposit on a flat they just shown you that afternoon because "someone else will take this great deal if you don't". Chances are someone will, so what? There are other flats out there. Start looking early and always lie about how soon you need the flat and other great deals you've found.
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I would also add that when an estate agent askes what you budget is usually give them a figure of about 20% less than you actual budget.
How often do you tell them 'my budget is HK$30,000' and they start showing you flats at HK$40,000. They say 'don't worry you can negotiate.
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selda
17 yrs ago
There are some good deals in the NT, if you don't mind living in village houses, instead of residential blocks. The air is also cleaner, bird songs instead of jackhammers, and food is cheaper, because you can buy directly from the farmers. The commute is reasonable, less than 1 hour.
HK life expectancy will change. Now it's high because a lot of the elderly lived a great part of their lives in rural China, they were not born in HK. They are healthy, but how about their children and grandchildren? HK population increased by millions during the 60s and 70s because of new immigrants. In the 70s the pollution wasn't as bad as now. In my first visit in 1989,
i thought HK pollution was scary. And yet it wasn't as bad as it is today. Air quality has been really bad in the last 10 years, and the trend is not reassuring. Things are getting worse.
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Wondering whether u know a place called LAGUNA VERDE in hung hom, I am living in this beautiful place for over 5 years now.I have just signed a new lease for 31K.Its a 3 bedroom apartment 1478sqft on 3rd floor with full sea view.The best part is its location.You can get to TSIM SHA TSUI in just 10 min, u can take a ferry to Wanchia have a swimming pool, club house facility, a beautiful park for children , mini bus to jordon HUNG HOM KCR and JORDON MTR.
I think in this price u could hardly find something in Hong Kong unless u choose to live far from the main city.
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"Wondering whether u know a place called LAGUNA VERDE in hung hom, I am living in this beautiful place for over 5 years now.I have just signed a new lease for 31K.Its a 3 bedroom apartment 1478sqft on 3rd floor with full sea view.The best part is its location.You can get to TSIM SHA TSUI in just 10 min, u can take a ferry to Wanchia have a swimming pool, club house facility, a beautiful park for children , mini bus to jordon HUNG HOM KCR and JORDON MTR.
I think in this price u could hardly find something in Hong Kong unless u choose to live far from the main city."
Well, the point is that for 31k/month, you could really find something three times that size with views in most cities around the world.
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Well i thought we were discussing HK
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FKKC
17 yrs ago
That's what I was thinking also!
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"Are you leaving HK due to high rents?"
I'm merely pointing out that rents in HK are really pretty steep.
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it really isn't so bad if you don't insist in living in certain crowded city areas, i used to live in Bonham road, fell in love with the environment (also property price!) immediately in Hong Kong Garden no.100 Castle peak road, fresh air, low density building, excellent panoramic sea view, very near to nice beaches, 30 mins to Central no traffic jam at all as all highway and tunnel, yet only 10k rent for a 1023' sq feet flat!
how i wish i had found this place earlier!
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