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Will rents come down?

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  1. #1

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    Will rents come down?

    I expect prices of properties to drop 15-20% or so. Does you think that the rents will also come down, as the prices drop? What is the historic record? I think rents hardly ever come down, unless prices drop by a very considerable amount (like 50% or so).


  2. #2

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    While property prices on a retail/sale point of view are stagnating, rental prices are likely to go up, not down.

    The logic being, if the landlord cant sell the property, deciding to sit until the property market improves, they will get their capital gain via increased rents, instead. So, what will likely happen, rental tenants will either move further a field to get a larger space for eqv rent, or they will downsize in the area they presently live/work, to reduce their rental cost exposure.

    It's definitely happening in Sai Kung at the moment, prices of rents have sharply increased since the beginning of this year. What was $25K for a 1400 ft2 duplex late last year, is now $35,000pm and so on.

    Last edited by Skyhook; 29-04-2013 at 01:46 PM.
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  3. #3

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    If you can't sell (because the market price for selling is going down), what you do is hold and rent at a higher price (unless you have to sell to recover some losses etc etc etc)...That's why it is always fun to see all those people hoping for the market to drop ...while in many cases, it means (at least in the beginning) higher rent...

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  4. #4

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    Quote Originally Posted by Mat:
    If you can't sell (because the market price for selling is going down), what you do is hold and rent at a higher price (unless you have to sell to recover some losses etc etc etc)...That's why it is always fun to see all those people hoping for the market to drop ...while in many cases, it means (at least in the beginning) higher rent...
    Nice idea, but easily disproved by checking reality. Pretty clear that rent rises when property prices rise... and when property prices fall, so does rent. Clear that this happened in both 2008 and 2011 in the last slight property price declines. And both fell for around six years after 1997.

    Plotting the Hong Kong Midland Property Price 100 vs Hong Kong Midland Realty Residential Rent since 1990....


  5. #5

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    We are coming up to rental renewal. Landlord originally was asking for a 20% increase on rent. We are in negotiation stage. So far we have been able to get the landlord to agree a 10% increase on rent. We are trying to squeeze a little more out of the landlord, but it seems a 10% increase is his bottom line.

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  6. #6

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    Supply and demand...Certain type of properties in SK are likely to rise because of the opening of HK academy and as residual of recent high purchase prices in the last 12 months. Some MTR stations will be opening fairly soon also driving prices up in those areas. It's not just about the rise and fall of buying/selling prices.

    There's no doubt that there has been considerable rental prices drops at certain times since 1997 but they were linked to far worse economic times than we are now. I don't expect any significant rental rise or fall in the next little while.

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  7. #7

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    Quote Originally Posted by Swannie:
    Supply and demand...Certain type of properties in SK are likely to rise because of the opening of HK academy and as residual of recent high purchase prices in the last 12 months. Some MTR stations will be opening fairly soon also driving prices up in those areas. It's not just about the rise and fall of buying/selling prices.

    There's no doubt that there has been considerable rental prices drops at certain times since 1997 but they were linked to far worse economic times than we are now. I don't expect any significant rental rise or fall in the next little while.
    So which is it Swannie, you expect rents to remain stable, or do you expect them to rise ?
    If you are living in Sai Kung you WILL be paying another 10% - 20% rental increase if your renewal is this year. The school will only make things worse, and the fact that they are expecting 50,000 more people to live in this area by the end of the decade ( source from the SK district council ), rents will continue to climb. If you want rents to drop, ask to have expat housing allowances scrapped, and watch rents drop at super sonic speeds, in popular expat areas...

    All rents have gone up in Sai Kung, that's a fact and it has very much been the talk of the whole SK town. I can also think of a number of commercial tenants that have been forced to either close up, or have had to move to a cheaper premises, having had their rents doubled earlier this year. Curves gym closed down and Le Petite Cafe moved near where The Chip Inn is located, just to name two..

    .
    Last edited by Skyhook; 29-04-2013 at 04:10 PM.
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  8. #8

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    Quote Originally Posted by cheepo:
    I expect prices of properties to drop 15-20% or so. Does you think that the rents will also come down, as the prices drop? What is the historic record? I think rents hardly ever come down, unless prices drop by a very considerable amount (like 50% or so).
    Just out of interest why ? And what time frame ? I am currently looking to buy and do see some willing to negotiate in region of 10%on asking sale price . Is that sign of downward trend ?

    Sent from my ST27i using GeoClicks mobile app

  9. #9

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    up down, around, sideways

    Last edited by gilleshk; 29-04-2013 at 05:27 PM.

  10. #10

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    A good communicable disease can bring rents down.


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