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Cooling Measures... for Hot Small flats

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  1. #191

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    Quote Originally Posted by OffThePeak:
    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.
    This is what you wrote in post no. 184:

    In the case of HK's Property market, the price rise is driven by more than pure sentiment.
    I would say - repeating for the third time, since things don't sink in quickly with Ray:

    + Rising rents, and
    + Falling rates

    Can explain almost the whole of HK's price rise, since Rental Yields are still OVER interest rates

    (end quote)

    Zero mention about capital gains and stress on the "Can explain almost of HK's price rise...."
    Last edited by ray98; 10-03-2015 at 06:16 PM.

  2. #192

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    To be perfectly clear, I am not advocating a Robinhood approach of taxing from the rich to give to the poor. What I am advocating is to make it difficult for people to benefit from non economically productive activities. Tax is only a means to an end, which is to generate economic growth in the long term. Property market does not drive economic growth, but rather a reflection of economic growth.

    Quote Originally Posted by East_coast:
    I suggest it is populist to ask for tax on the rich.

    Then you say



    Can you explain where I have distorted the argument?

  3. #193

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    Not to be rude jumping in the middle of your discussion, but I feel that rental yield or rather cap rate is the culprit. It is the notion of rising rental rates that is giving people a false sense of security to keep chasing prices while being completely blindsided about the eventual outcome.

    Quote Originally Posted by OffThePeak:
    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.

  4. #194

    It is not that easy getting required data, Hullexile,
    But I have a chart somewhere tracking it back to the 1970's

    Things like major wars do disrupt it, obviously.
    Fred Harrison says he has tracked in for hundreds of years in the UK.

    There's now some academic work on it too, I believe. Some of my work on shipping cycles is used in college courses, so that would not surprise me,


  5. #195
    Quote Originally Posted by vtorch:
    Not to be rude jumping in the middle of your discussion, but I feel that rental yield or rather cap rate is the culprit. It is the notion of rising rental rates that is giving people a false sense of security to keep chasing prices while being completely blindsided about the eventual outcome.
    I agree with you.
    If rents stopped rising, I think the property market would soon stall too.

  6. #196

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    Quote Originally Posted by OffThePeak:
    Yeah. It sounds strange, doesn't it?
    Here's the chart:
    https://pbs.twimg.com/media/B_KQJHHUsAAfPhp.jpg:large

    Obviously, the data before 1575, or sometime later is suspect
    You do realise you are misinterpreting the chart, right? It had sodders all to show any correlation between long and short interest rates to property prices. Andy Haldane was talking about economic growth and the chart you posted was to illustrate his point about the deferred benefit principle as a growth driver and the use if interest rates as a proxy measure to savings.

    If you are going to be post charts, please cut the careless mistakes like US$ rates being at its lowest for 5,000 years (US$ wasn't used in ancient Babylon because it didn't exist!) or try to correlate property prices to interest rates because even in UK, modern property registration is a recent feature of Victorian times (I think and stand to be corrected on this point).

  7. #197
    "You do realise you are misinterpreting the chart, right? It had sodders all to show any correlation between long and short interest rates to property prices."

    Ray, I have no idea what you are speaking about.
    This chart shows long and short term Interest rates, nothing else.

    However, it is special, since I have never seen such a long time frame on a chart below.

    (for you to lecture me on interpreting charts, I find very funny.)
    Last edited by OffThePeak; 10-03-2015 at 08:03 PM.

  8. #198

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    Quote Originally Posted by OffThePeak:
    "You do realise you are misinterpreting the chart, right? It had sodders all to show any correlation between long and short interest rates to property prices."

    Ray, I have no idea what you are speaking about.
    This chart shows long and short term Interest rates, nothing else.

    However, it is special, since I have never seen such a long time frame on a chart below.

    (for you to lecture me on interpreting charts, I find very funny.)
    You posted a chart and didn't even know where it came from and what it was originally intended to show?! That's just poor.
    Last edited by ray98; 10-03-2015 at 11:55 PM.

  9. #199

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    Aug 2007
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    Quote Originally Posted by vtorch:
    To be perfectly clear, I am not advocating a Robinhood approach of taxing from the rich to give to the poor. What I am advocating is to make it difficult for people to benefit from non economically productive activities. Tax is only a means to an end, which is to generate economic growth in the long term. Property market does not drive economic growth, but rather a reflection of economic growth.
    Too many wannabe socialists for the Peoples Republic of Hong Kong who say no, no, no they are not doing their Robin Hood thing and then do precisely exactly that by finessing with a 'non-economic productive activities' label or somesuch other similar nonsense.
    Last edited by walkup; 11-03-2015 at 05:50 AM.

  10. #200

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    Quote Originally Posted by walkup:
    Too many wannabe socialists for the Peoples Republic of Hong Kong who say no, no, no they are not doing their Robin Hood thing and then do precisely exactly that by finessing with a 'non-economic productive activities' label or somesuch other similar nonsense.
    So much wrong with that post.

    - Who are these "too many" who have said they are not doing a Robin Hood thing. I csn only see one.
    - taxing the rich makes you a socialist or even worse a wannabe socialist?
    - who has gone and done the robin hood thing?