Ray wants to people WORDS in my mouth.
I wish he could simply stick with what I say, then the discussion might go somewhere
Ray:
"To put it in simple terms, you are saying price rises are because of increasing rent levels and ample liquidity and the returns by from rent are in excess of the financing costs causing more investors to buy for rent."
Nope.
The point is this: People who buy property will look closely at both rates and property yields. If Rates are above Net Yields, then investors need to SUBSIDIZE their yields to pay interest. I would regard that as speculation: ie they are paying for a bet on future capital gains.
Ray:
"the fault with your argument is that it assumes that most property investors don't consider capital gains which is a load of bollocks..."
Again. I never said that.
Instead: Yield pick-up and Capital gains are both on the menu now. And it makes sense to buy when you EXPECT to get both. Betting only on the capital gain is dangerous, since this situation usually comes when the market is dangerously high. If prices then reverse to the downside after such point is reached, then investors would have BOTH: negative cash returns on any money they borrowed, and capital losses.
I DO AGREE with those who say rents are too high, and the HK government should aim to get more SUPPLY into the property market. That seems to be a high priority now, but there were too many years where supply lagged demand, which is why Rents are so high now.