News Hong Kong Property & Finance

Impact of Japan disaster on HK property market

ORIGINAL POST
Posted by Eloise Lacour 14 yrs ago
Dear all,


Do you see any impact of the very sad Japanese events on the HK property market in the short to middle term?


We may have found our dream flat to buy. I am just wondering if the prices are going to fall, maybe it isn't safe to buy it now? Or a good opportunity to negotiate the price?


Thank you for your opinion

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COMMENTS
wongjoseph 14 yrs ago
It's still a bit too early to say or predict if there would be any negative impact on the local real estate market place, because the Japanese events only happened few days ago but it did affect the stock market as you can see from the news. The triple disasters in Japan should have some psychological impacts on people's minds when it comes to buying any major items, especially big ticket purchases, such as real estate but to what extent and for how long, nobody knows. Based on what I have read, some Japanese investors have already pulled out and taken some capitals out from the local investment markets in order to try to save and help revive the Japanese economy but would this action create a domino effect that would affect other things and commodities such as the real estate market in Hong Kong? It is very hard to say at this time. I think there are a lot of people are having a wait-and- see attitude right now and watch what is going to happen next? In your case, if you are thinking of buying your dream home now, in my opinion, maybe you should put off your plan for few weeks and see what will happen before you make any move. For few weeks, it probably would not make any difference at all in price and what will be available for sale etc. If you are ready to make this decision, please let me know because I am a licensed realtor in Hong Kong and I can probably give you a good deal because you are nice.


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Loyd Grossman is Miss Venezuela 14 yrs ago
Will push up prices unless world economy crashes. Flight to quality. Equity markets too volatile.

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Loyd Grossman is Miss Venezuela 14 yrs ago
Economy crashed in 2008 and HK property only down a little before recoverying. If you like the flat and can afford it, then buy. Often, if you always push for the best price you end up losing. Inflaion is kicking in.

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wongjoseph 14 yrs ago
I read today's news from Singtao Newspaper in Hong Kong that, as a result of the crisis in Japan and the plunge of the local and worldwide stock markets, some owners in some apartment complexes in Hong Kong have already reduced their asking prices between 2 to 10% to sell. The article is in Chinese but you can take a look at it and have somebody you know to translate it into English for you: Read More


Imagine for 10% decrease in price of a home of 10 millions, it would be a loss of 1 million to any potential sellers between now and few days ago before the crisis. This amount is a life time saving to a lot of people.


I don't know if it is a good news or bad news to the Hong Kong real estate market but at least for now, it is good for the buyers because now they have a chance to negotiate the prices and terms with the one time "tough-to-deal-with" owners but I have no idea how long this trend will last and to what extent? The fact of the matter is some banks in Hong Kong have already raised their mortgage and other lending rates.


Is it about time the burst of the bubble?


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kiwimoa 14 yrs ago
wongjoseph; I dont know why people are reducing their prices to sell, as there is such short supply, well at least where I live anyway and prices are still going up.


with the large deposits that have been required for sometime now and with sales tax, people are more long term with hk property and will hold, investors included. The only people I could see selling cheap, would be those who are perhaps over leveraged or own a large HK portfolio and are perhaps nervous with what is going on in the world and this rumored 'bubble'.

Am I missing something? I havent seen any increase in my mortgage rates...

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Loyd Grossman is Miss Venezuela 14 yrs ago
Kiwimoa. I agree. A lot of people think the housing market is like the equity market where people buy and sell on the slightest change of sentiment. This is completely the wrong way to look at it. This may have been the situation in 1997 and - to a lesser extent - before the introduction of the Special Stamp Duty; but now the vast majority are end-users or long-term investors who don't want or need to sell. They have a lot of capital tied up in the building and are unlikely to get out cheaply. Also, most of them have been saving since the crash of 1997, have put down large deposits and are financially stable. The ones athat aren't end users are probably cash-rich from the Mainland. Either way, don't expect any bargains unless Daya Bay explodes in which case we are all in trouble.

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wongjoseph 14 yrs ago
Hi Kiwimoa and Loyd,


Thanks very much for your inputs and insights. Please note that the news about some owners in some apartment complexes who are reducing their prices to sell was not an article or a story, it was indeed a report from Singtao Newspaper, one of the oldest and credible Chinese newspapers in town. They gave out and published the report which was based on facts and what had happened, just like news you see it from TV or the South China Morning Post. When I have time this week, I will try to translate the report to English so that everybody can read it. Read More


We are not talking about an immediate crush because it will take time for the real estate market to change or adjust and it could be the beginning of a new cycle and I can appreciate the fact that it may not affect all areas in the city and also another fact that most property owners have a substantial amount of equities in their properties so it makes it very hard for them just to sell it cheap or walk out unless it becomes really necessary but as you may agree with me that anytime if there was something major and bad happened, such as the triple disasters in Japan, it would create some kind of psychological fears and negative impacts on people's minds as evidenced by the continuous worldwide plunge of the stock markets but this effect could be short-lived or who knows?


You can verify about the increase of the mortgage and lending rates with your bank and other banks by calling them up just to proof if the report from the newspaper was correct?


During my past 30 years in real estate, I have seen downturns and real estate prices had gone down up to 50% of the original value in Canada; US and in Dubai, UAE about two years ago. I had lived and sold real estate as a realtor in these countries before.


But let's hope this trend is just a short-term adjustment but these days, most people in the world worry about the radiation leaks from the reactors than anything else and this situation is getting worse every day and out of control.


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Loyd Grossman is Miss Venezuela 14 yrs ago
wongjoseph. I don't there is a cycle any more because we now have zero speculation thanks to the Special Stamp Duty. It's a completely different ball game so all the old charts and interest rate theories can be chucked out. UK, US, Dubai are now not comparable - even in the broadest sense. To buy a flat in HK, you have to be very solvent - end of story. So now you just have people who own flats, and the vast majority of them are comfortable with their exposure and can take a sharp rise in rates. Of course, there will always be a few that want to sell quickly but you will be lucky to find them.

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hkxxxpat 14 yrs ago
Before one chucks out the old charts and says no more cycles etc, keep in mind the special stamp duty is very limited - if I buy through a company no SSD, and if I buy non-residential outside SSD scope too (anyone note the commercial/ industrial up 30% in recent months). I thought even you raised this before Loyd.


And if there is radiation that comes towards HK, prices could easily come down 20-50% in a month if not a week. Of course all those waiting on the sidelines will still wait, until property goes back up (assuming the radiation isn't really an issue) and then commence their complaining again about high property prices.


Prices were cheap in SARS because people were scared (remember masks everywhere, fear in people's eyes, no shaking hands etc), we are on the edge again it seems, so get your cheque books out and mortgage in place if you really are ready to buy. But people want to buy in calm times at cheap prices, and that is not the way it works.

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wongjoseph 14 yrs ago
Thanks for your insights, Loyd but I think we should focus our answers on the question being asked "the impact of Japan's disaster on HK property"? Yes, gphk, I couldn't agree more with you that if the events in Japan deteriorate and it looks that way now that there will be many Japanese people who will come to HOng Kong to purchase properties for investments and maybe even moving here for good. So, these disasters could have a positive impact on the HK's property market.


Last time, I heard they were trying to pour sea water into the reactors and trying to cool off the rods but to no avail so the situation is kind of out of control at this time and there is a very good chance that the reactors will spew more radiations to the atmosphere and they were also saying that a magnitude of 8.9 or 9 from the quake will have continuous aftershocks up to a year or so. They were using an example of the quake from Chile which happened about a year ago. So, it does have short and long term psychological fears and impacts on people living in Japan now.

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Loyd Grossman is Miss Venezuela 14 yrs ago
The Chernobyl nucler reactor had no containment vessel (unlike Fukushima Number 1) and blew up pushing radioactivity into the skies of northern Europe. Rain brought this radiation down to earth. There doesn't appear to have been any major affect except in the area of the Ukraine close to the reactor. I think HK is far enough away from Fukushima. People shouldn't overreact - but look at the number of half-wits who have been buying up salt.

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wongjoseph 14 yrs ago
It was caused by psychological fear more than anything else and in the examples of buying salt; pills and masks, there are tons of those half-wits out there, not just from Hong Kong; China but as far as from the west coasts of US. Imagine for a moment, how many people who have made tons of quick bucks from these disasters.

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kiwimoa 14 yrs ago
The winds from Japan, dont blow this way. During winter, we experience north west flow from off the Asian continent and during summer the winds come from the south. If anyone thinks or states otherwise, it is BS. I'm no expert, but it is easy to see that the global supply chain and global production outputs are going to slow down as a result of what is happening in Japan. How this affects HK housing, who knows, but I cant see it causing a crash.


Does anyone really think property will ever reach SARs levels again? We just had a massive global financial crisis, prices in some areas of HK barely moved and we are now at an all time high. Will Japan be able to prevent further problems at the power plant? How long will it take for them to start recovering? Only time will tell.

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wongjoseph 14 yrs ago
I heard there was another major quake on the 15th night time close to 6 magnitude near Tokyo and it could trigger the eruption of Fuji Yama which has been inactive and silent for over 300 years now. They said the eruption of Fuji Yama is likey to happen. Don't know when. And I don't know what this news means to people in Japan and other people as well. If it happens, it would be the fourth disaster to strike Japan and it is going to have an enormous negative impact on the world's economy, not just the Hong Kong's real estate market.

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Loyd Grossman is Miss Venezuela 14 yrs ago
I predict that 1) they will reconnect the power at the nuclear power plant 2) pump water back into the chambers and 3) cover it with concrete. In 2 weeks time, everyone will be focusing on Colonel Gaddafi's war crimes trial. Japan (which is used to disasters) will stoically continue as before though, obviously, a recovery will take some time.

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kiwimoa 14 yrs ago
wongjoseph, that is called an aftershock and there will be plenty more for the next year or so. Areas such as Japan have a lot of earthquakes, so nothing new there. I was brought up in such an area, where earthquakes although not regular, they did happen and it wasnt such a big deal, until recently.


Mt Fuji eh.... the sky is falling...


Eloise;

sorry to diverge from your question, but it's Hong Kong, the market is high and until recent events things have been pretty stable for the reasons I have mentioned above. Personally I am wondering the same thing too about Japan, but FYI I have just brought again. So I guess it all depends on how long you are going to be in Hong Kong. I have chosen a property that is efficient and in a complex that has reasonable demand. If I have to leave HK and it has lost some value, then it is also an apartment that there is high rental demand for. Other things you could do to reduce your financial risk, is negotiate a low deposit and agent fee and have long settlement dates for signing the agreement and for completion. OR you could just wait.

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wongjoseph 14 yrs ago
I know and everybody knows it was one of the aftershocks and if you look back the comments I made before, I have also mentioned about the continous aftershocks. It is normal to have aftershocks especially a magnitude of 9. They were saying Japan will have aftershocks for a year or so citing the example of the quake in Chile which happened about a year ago and they still have aftershocks but the reasons why people paid attention to this one because it was a magnitude of 6, probably the largest after the big one and it was so close to Tokyo and the comments about the possible trigger to the eruption of Fuji Yama was based on a news report and from experts in Japan and other countries NOT from me, an outsider, so my comments were indeed objective NOT subjective. Again, I read it from the news report that, given Fuji Yama has been inactive and silent for more than 300 years, there is a very good chance that it may erupt, especially after this major quake but nothing is for sure. Based on comments from experts again that there is a cycle of about 300 years for any major earthquake to occur. They were taking about the likelihood of an overdue major quake to occur on the westcoast of North America. They don't know when but it will happen very soon.


I know Japan is so used to quakes and Tsunami but they all agreed that these triple disasters were the major and most worst catastrophie they ever had, which can only be compared with the disasters from World War II when US dropped two atomic bombs to the two cities in Japan.


Don't give me wrong, I feel as bad as anyone about these disasters in Japan and my heart and blessings go out to those who have suffered from these natural disasters.


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