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What is a rational property price?

  1. #151

    Join Date
    Feb 2006
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    I just dug this old gem up from April 2007. Looking back I'm surprised how spot on it was.

    Quote Originally Posted by cendrillon
    History tends to repeat, but I don't think a correction of that size will happen anytime soon, as rental yields are currently pretty attractive relative to interest rates, which makes property an attractive investment.

    The risks as I see them are interest rates going up, which is certainly going to happen soon, although I think it will be limited thanks to the US. By this I mean that the US cannot afford to increase interest too much or they're going to go into a nasty recession. Since the HK dollar is pegged, it means there will always be a source of cheap capital flowing into Hong Kong. A few percentage points of increase is certainly possible, but I don't think the US can afford more than that.

    The other risk is that the economy runs into trouble, as in 97, leading to increased unemployment and higher vacancy rates / lower rental yield.

    I'm not really sure what a down-turn in the US will mean for Hong Kong, and how much growth in China will help to support HK in the event of a US down-turn.

    On another note, a few people commented that there are markets within markets. Although property as a whole may go down, growth within certain areas may still offset the overall downward trend.

    Which brings me back to K-town. I think this area has a lot of potential. The question is how severe any variations in rent / interest rates will be over the coming years and whether I have enough cash to ride them out.
    Big Rocky likes this.

  2. #152

    Join Date
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    Quote Originally Posted by cendrillon
    I just dug this old gem up from April 2007. Looking back I'm surprised how spot on it was.
    Good stuff. We think very similar. It’s nice to go back and read things you wrote in the past which were proven right in hindsight huh?

  3. #153

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    Quote Originally Posted by Big Rocky
    Good stuff. We think very similar. It’s nice to go back and read things you wrote in the past which were proven right in hindsight huh?
    I'd actually forgotten what I was thinking precisely at the time. The nice thing about forums is you can see what you were thinking, which things panned out, which fears were justified and which were not. It's amazing to see this stuff, and not so that I can brag that I was right or anything, but rather to see the beginning of a journey and see how far things came.

    I have this spreadsheet I created in 1997 that was my investment plan. It amazes me how despite lots of ups and downs along the way things more or less wound up where the plan said they would some 20 years later. I think it's extraordinarily difficult to make predictions over a short time frame but over 10+ years things wind up more or less where you would expect.
    Last edited by cendrillon; 14-11-2017 at 11:26 PM.
    Tadashi likes this.

  4. #154

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    Feb 2015
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    Quote Originally Posted by Big Rocky
    It’s nice to go back and read things you wrote in the past which were proven right in hindsight huh?
    Now wipe the spank off

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    cendrillon, foxwendal and shri like this.

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