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CY Leung supports rising property prices

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  1. #1

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    CY Leung supports rising property prices

    In this article, CY flat price vow as curbs idea rejected - The Standard he cites some of the same points I have made in the past as to why property in HK is currently realitvely affordable.

    In an interview with The Wall Street Journal, Leung said he would not bring prices down by "flushing the market with new land supply."

    And looking at the Centa-city index, it seems prices in HK last week hit an all time high.


  2. #2

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    edit: can't be bothered...

    Last edited by Satay Sue; 26-05-2012 at 10:16 AM.
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    Let me try and explain it.

    Take a 10m flat. If you bought it with say a 30% deposit, and are paying say 1.5% pa in interest, that comes to around $8750 a month. To rent the same place you would be looking at around 40K a month. So, the cost of "owning" right now is significantly cheaper than renting.

    It is for this reason that CY sees no reason to "curb prices". If he wanted to he could easily curb prices by adding more supply, increasing deposit requirements, increasing stamp duty etc, but he will not do any of these things (indeed, once the current measures are removed, that will be even more supportive for prices".

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    edit: Its those who "can't be bothered" who suffer in all of this by paying high rents. On the other hand, those who work hard, are smart, ambitious, and who do their research to make well-reasoned decisions are the ones who thrive.


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    $8,750 for borrowing $7m? Even with no interest that would be over 66 years of mortgage.

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    JayKay - you might be confusing the cost of servicing the mortgage, with the cost of paying back the interest.

    The way I look at it is that your cost of ownership is the cost of interest. Any amount you pay back in principle is essentially a payment to yourself, and therefore not a "cost".


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    It still has to be paid however you cut and dice it. And that is simply not affordable to the majority.

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    Quote Originally Posted by jaykay:
    It still has to be paid however you cut and dice it. And that is simply not affordable to the majority.
    Actually no, it does not need to be paid. You can simply pay the interest, and when you sell the property, you then repay the bank the mortgage amount keeping any profit you hopefully made.

    So, say you buy a 5m place, with a 3m mortgage. You pay the mortgage interest only for 5 years (much lower than the cost of renting it). You sell in 5 years for 7.5m. You pay back the 3m mortgage, and you have made a 2.5m profit, meanwhile also living cheaper than renting.
    Last edited by randy1; 26-05-2012 at 11:12 AM.

  9. #9

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    Original Post Deleted
    Some 10m properties rent at $45K, other $35K. You can do the same calculations based on whatever property you live in, what you can afford, what loan rate you can get etc, but the bottom line is its cheaper to own than to rent. I think even you have admitted that yourself in the past...

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    Original Post Deleted
    And as for your repeated claims ever since that prices would collapse, here is the truth of the matter as to what prices have done.
    ... Centa-City Index
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