What to do with money from apartment sale?

[d1deez]

hi all,

A bit peeved about my current situation. We just sold our property in Tai Wai after holding it for six years and it did not gain much. Currently interest rates being offered by hk banks are dropping like the dow. We do not hold any permanent residence in hk. Given the situation, it would seem alittle foolish to buy property now. Is putting the money in a CD the only worthwhile option? What do you think?

thanks!

btw we sold because we didn't feel like we would use it much since we reside overseas and the building was getting old. In hindsight, looks like we should have just rented it out.

[KnowItAll]

Where would you be retiring or moving or settling permanently?

Sounds like you need a good financial adviser to help you understand what your options are.

[d1deez]

Since I don't have permanent residence, looks like it will be in the States. I do frequent hk at least once per year though. Thanks

[lionrock88]

Just like that Merrill Lynch guy, I'm "maximum bullish" on HK property for the next 1 to 2 years. As you said, interest rates should be falling this year anywhere from 1% to 2% according to whichever expert you listen to.

Coupled with our rising inflation, we're in (or about to enter into) negative interest rate territory.

This means only one thing - the continuation of rising HK property prices.

Just make sure your mortgage prepayment penalty isn't too expensive or long, so you can get out less painfully when the ride is over.

hi all,

A bit peeved about my current situation. We just sold our property in Tai Wai after holding it for six years and it did not gain much. Currently interest rates being offered by hk banks are dropping like the dow. We do not hold any permanent residence in hk. Given the situation, it would seem alittle foolish to buy property now. Is putting the money in a CD the only worthwhile option? What do you think?

thanks!

btw we sold because we didn't feel like we would use it much since we reside overseas and the building was getting old. In hindsight, looks like we should have just rented it out.

[d1deez]

While I agree that property prices still have room to rise a little bit more, I'm still not sure that now is the best time to buy. I think a majority of the price increases have to do with people taking profits from the stock market and using it to flip real estate. I also believe that mainlanders buying up property in hk will also be curtailed as the chinese government begins(have) to tighten down monetary policy. Then there's wages. I don't think they have risen much; though the same can't be said for the prices of consumer goods.

[lionrock88]

Again, the current economic fundamentals - falling interest rates and rising inflation- support increasing property prices in HK.

Negative real interest rate environments don't come around too frequently, and putting your money in property will help you to maximise returns on your $$ and hedge against inflation vs. putting it in a HK CD.

Put your money in a HK CD and you'll find that the interest you're earning will be less than the inflation rate, and your purchasing power will be decreased.

Tightening monetary policy measures on the Mainland will lead to more money leaving China seeking better returns (probably into HK).

HK property is a very attractive play right now. The opportunity cost of not having any exposure to HK property will be plain to see in the next year or two.

[Ron M]

This is interesting to me, I am seriously considering moving to HK or China in the near future.

I agree that property there has to increase.

However, I have no idea what you mean by investing in a CD - what is a "CD"?

Ron

[d1deez]

Hi Ron,

CD = certificate of deposit

Currently the banks are paying next to nothing for putting money, be it USD or HKD into savings accounts or even less liquid instruments such as 6 or 12 month CDs. Basically we're talking between 2-3% interest for CDs and 0-1% for passbook savings. Therefore, what people seem to be doing is buy up property since everyone is predicting good upside. Furthermore, you can rent the property out and receive income that would surpass what you would get from the bank. The other question I have is how on earth are the average HKer's able to afford these properties. I know majority of them live in government sponsored housing, but as for the rest, has their wages improved significantly? I mean these new developments being built these days are so small the rooms are barely useable.