Posted by
maz27
15 yrs ago
So finally we have got mortgage approved with Mortgage corp because we need to borrow over 70%. HSBC said its only valid 2 or 3 months but now worried about interest rates. Would you buy now?
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If you secure in your job, and not overextending, yes. factor in a 3 percentage point increase in your mortgage payments; if you can meet them should be no problem.
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Depends on the area. There are still a few areas that are lagging the overal market in terms of price appreciation over the last 6-9 months. I would certainly avoid hot spots like Yoho Town or Tsueng Kwun O which have appreciated massively during that period and you are looking at $6k -7k per ft. Still places that are good value for money with potential to appreciate are Tung Chung, Park Island which is about $3.5k - 4k per ft. If you are looking for smaller flats, perhaps discovery bay where you can still buy a 500 - 600 ft flat for $1.5 - 1.8 mil. DB might be a little expensive for transport, but if you are after an investment property, you could easily fetch rents between 7k-8.5k for a $1.5 mill flat. That's over 6% rental yield and way, way more than you'll gonna get from a fixed term bank deposit.
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Gugubear. YOHO Town phase 1 is selling at around HK$4,000 psf. The YOHO Midtown is selling at 7,000-8,000. Park island is always about 25% cheaper than everywhere else in HK because no cars are allowed which rules own status-conscious purchasers. It's also seen as inconvenient by locals even though it's quicker and cheaper to Central than DB and is quicker to Central than Yuen Long.
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Lohas PArk is good value!
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LGMV. Yah, can see your point about Park Island. I would just stay away from buying those flats in Yoho Midtown, Tsung Kwung O etc. at 7-8k as traditionally those areas were & are not very cosmopolitan with high concentrations of subsidized housing (nothing against the good people) but the area is very unsightly with block after block of the famous pink/green/yellow & blue painted buildings only seen in Hong Kong. Prices per ft. are even higher than traditional flats in Broadcast Drive / Waterloo Hill - That's just nuts for those areas ! but hey, that seems to be the new norm for any new flat brought onto the market regardless the area and the days of new flats for 3-4k are long gone. I would not be surprised to see Midtown & areas like it rise even further in the next couple years.
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Do not buy now, you are crazy. HK is set for the biggest crash to date, Firstly the terrible build quality, and terrible space planning (living like rats in a shoe box) of most flats in Hong Kong. What are these flast going to look like in 10 years. Pieces of crap! Secondly the massive over supply that is being kept quiet, thirdly the over speculation reminiscent of the USA market. problem here is your lucky to get
The pathetic yeilds, your lucky to get 3%. You are all planning on properties prices rising, just like they did in the USA. I've got news for you it will crash.
1. The interest rates will rise, and most probably up to 5% in the next 3 years. The RMB will rise and this will slow China's growth. In turn stemming the flow of RMB into Hong Kong. These 2 things are the only factors in why property has not crashed already.
Property in Hong Kong is over priced, over sold, over speculated and actually a terrible long term investment!
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Tristan. the inevitable rise of RMB in my opinion will push local prices higher. That would make flats in HK even cheaper to mainland buyers. Property in Mainland China could taper off, as you say China may slow down a bit. The Chinese will just stop buying homes in China and push even more money into HK property taking advantage of the wider discount on the HK dollar. Yields of 3% are pathetic, I agree but that applies more to the luxury end (flat over 10 mil.) Yields in the mass markets are much higher 5-6% still in many areas. As an example - an investment flat in DB where you can still buy a 550ft flat for $1.5 mil would easily fetch you around $7.5 - 8K that would give you over 6% yield or in other terms more than $90,000 per annum. $1.5 mil. kept cash in the bank would yield you a tall latte in Star Bucks per annum. $1.5 mill placed in stock market could get you more or cut you in half. The currency markets and gold are just as risky. Finally I would hardly call 2 to 3 million bubble prices, which an average mass market flat costs in HK.
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Tristan. If HK house prices didn't crash during the Lehman crisis, then it's unlikely they will crash in the near future. They have only gone up 24% bringing them back to the same level thet were 2 years ago. The stock market has gone up by a much larger percentage since the lows of the Lehman crisis. I think China could have some problems but very few people there buy on credit and the majority of them save like mad. For a crash to happen, people need to be overextended and have no savings. Also, I think much of this house price furore is down to sour grapes - ie people who thought they would be able to buy cheap now having to dig deep into their wallets. Also, Tristan, if you buy a new property for Sun Hung Kai or Henderson, it will be of good quality and definitely better managed and built than in most places in The West - with the possible exception of Germany.
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Okay...maybe this needs to be posted under a different thread,dunno. But would you buy now? Honestly? I am one of those unlucky,or as I like to call myself and my spouse ,"dumb" souls who have missed every opportunity knocking in front of our face. We have all started out equally in this race and now find ourselves way behind amongst all our friends and colleagues who have decided to dive into the property market. Way behind in terms of financial gain. So...now that I REALLY REALLY want to dive in, I'm hearing all these warning signs again (so familiar) and that we should wait. My question is, do I just buy what I am renting or do I just make a "safe investment" of 2-4 million in some under-valued or mass-market place?
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maz27
15 yrs ago
Hi Barmarama - on reading your thread it could have been written by me - we are in the exact same situation! And added to my original question decided now that since interest rates may go up we cant afford a flat like the one we are renting.
Yesterday we made the decision to try and renegotiate our lease only to find the landlord has sold it although strange since it is unrenovated and the buyer must have paid over the odds for it.
So now we will have to downside square footage as rental prices have gone up or we downside square footage and buy. I love living in our neighbourhood and now we will have to leave.
Not sure what best to do....
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Keep renting, its great for the landlord.
No need to participate in the property market. There's plenty of people in it already and enough competition pushing up prices. Us property investors need tenants to pay the mortgage :)
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When I bought my first flat there was no way I could afford the sort of place I wanted to live in. That doesn't mean you can get your foot on the property ladder by buying a rental unit (which is what we did).
After several years of buying rental units we had sufficient capital gains to sell the lot and buy a decent sized place. The key is to get your foot on the ladder so you don't get priced out of the market. Once you learn a few of the tricks to renting property (keep the place nice and don't be greedy on the rent) you'll feel much more confident about buying more units. You have to sell the units in order to realise a capital loss so even if there is a crash as long as you hold onto the property/ies and keep them rented you'll still be ok in the long term.
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dannyboy,
That looks like good advice, since from the 1997 peak, HK has moved from a high interest environment (near 10%) to an ultra-low interest environment (near 1%), so anyone holding expensive property has seen the interest burden fall over that time. And prices have also picked up since the SARS low.
From where we sit (near 1%), it is impossible to imagine a meaningful drop in rates, if we get a meaningful RISE in rates instead, people with big mortgages will find their financing costs rising, and rents may not keep pace, if the economy is weak.
My point is, that advice that has worked "until now" may not work in the future, since it is obvious that we have reached a historical extreme now - lowest ever interest rates. Be careful !
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I purchase 3 apartments in Hong Kong, all in 2003, so i did very well. I rented 2 and live in one. Thankfully i have just sold 2 for over 160% profit. My third is now up for sale and i have had 3 offers. So far the third is $400'000 more than the asking price. This is only a $6'000'000 apartment. The guy that is buying is adding to his portfolio of 4 flats all acquired in the last year. His rental yield on this flat of 3%. He has a mortgage agreed of 80% at an interest rate of 1% from HSBC.
This is ridiculous what is he thinking, if all his properties are based on this formula then as soon as the interest rates rise as they will he is in serious trouble.
You cant rely on China there bubble is coming, The USA and EU will be pushing for the RMB to be revalued, if China dose not comply we will see import duties rise on China made products. This and the slow down in the USA is going to stem the flow of Chinese made products, and in turn stem the flow of Money from the mainland.
I saw the crash in the USA and sold my properties maybe 1 year too early but here? I think not.
Just look out at night see the amount of properties terribly designed and built. The Hong Kong property market is controlled by 6 or 7 greedy developers and kept artificially high by the HK government. Take a walk and see how many shops are empty this is unpresentated.
You mention luxury what living in Park view in a 2000 sq ft apartment overlooking a polluted mess. Hong Kong is Ugly, Dirty and getting more polluted.
Enough is enough im getting my kids out of this they have ben here for 9 years thankfully no respitory issue. unlike lots of his friends!!
Good luck im not preying for a crash i have seen all these signs before... My feeling is its coming!!!!
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Make sure you copy and paste the same message to ALL the threads Tristan. It will keep you busy.
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