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What is a rational property price?

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  1. #1

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    What is a rational property price?

    On what rational or mathematical basis could you concluded "hk property was overpriced 5 years ago?"
    @Big Rocky I would say that it started to be overpriced around 5 years ago. This is based on the assumption that rental yield should be 5% of property price p.a. ignoring costs. You could make your own assumptions, factor in long term expectations for interest rates etc. but I find this a good rule of thumb.

    The interesting question is why I didn't sell if I thought property was overpriced and it's because I don't sell assets as a general rule, especially on the basis of price movement expectations.
    Last edited by cendrillon; 04-11-2017 at 05:04 PM.
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    Quote Originally Posted by cendrillon:
    @Big Rocky I would say that it started to be overpriced around 5 years ago. This is based on the assumption that rental yield should be 5% of property price p.a. ignoring costs. You could make your own assumptions, factor in long term expectations for interest rates etc. but I find this a good rule of thumb.
    The government determines the price not the market.

    The higher the climb the bigger the fall. A sensible government would of put effective measures in place years ago to cool the situation. CY Leung promised this but didn't do anything apart from making flats smaller which is clearly not effective.

    It is almost as if they want an economy disastrously distorted by property plays followed by gargantuan crash where poor old HK will need to be financially rescued and the vested interests loose significant influence.

    When it does turn it could be very fast and deep without a bounce back - wild speculation.
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    you guys just don't relentplease share how much you have made, just to inspire the younger generations

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    Quote Originally Posted by East_coast:
    The government determines the price not the market.

    The higher the climb the bigger the fall. A sensible government would of put effective measures in place years ago to cool the situation. CY Leung promised this but didn't do anything apart from making flats smaller which is clearly not effective.

    It is almost as if they want an economy disastrously distorted by property plays followed by gargantuan crash where poor old HK will need to be financially rescued and the vested interests loose significant influence.

    When it does turn it could be very fast and deep without a bounce back - wild speculation.
    US quantitative easing caused most of the bubble in my opinion. I don't see what the Hong Kong government could have done about this other than depegging.

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    Quote Originally Posted by Tadashi:
    you guys just don't relentplease share how much you have made, just to inspire the younger generations
    Enough

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    Not sure why people think the HK property market would crash. I'm bullish, given the opportunities and relative affordability for white collar workers, it's pretty good. A city as cool as HK is never meant for everyone to own property. Same as London or New York.

    Affordability in other western cities is considerably less if you compare the same salary given high taxes and interest rates in the west along with income to debt ratios allowed.

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    Quote Originally Posted by cendrillon:
    US quantitative easing caused most of the bubble in my opinion. I don't see what the Hong Kong government could have done about this other than depegging.
    Print more land

    Lots of measures to get more sqftage actually into the market

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    Quote Originally Posted by MandM!:
    Not sure why people think the HK property market would crash. I'm bullish, given the opportunities and relative affordability for white collar workers, it's pretty good. A city as cool as HK is never meant for everyone to own property. Same as London or New York.

    Affordability in other western cities is considerably less if you compare the same salary given high taxes and interest rates in the west along with income to debt ratios allowed.
    Hong Kong's premium is based on Hong Kong not being China Proper.

    It is a modern progressive city with fair and open government in Asia - 25 years of stagnation means the lustre has come off. Still for many much better than other cities in Asia but the many is getting smaller as other cities get better governance and are more pluralistic societies.

    Why should there be a HK premium in 2047?
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    Quote Originally Posted by East_coast:
    Hong Kong's premium is based on Hong Kong not being China Proper.

    It is a modern progressive city with fair and open government in Asia - 25 years of stagnation means the lustre has come off. Still for many much better than other cities in Asia but the many is getting smaller as other cities get better governance and are more pluralistic societies.

    Why should there be a HK premium in 2047?
    I'm sure Shanghai and Beijing are also expensive.
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    Quote Originally Posted by East_coast:
    Print more land

    Lots of measures to get more sqftage actually into the market
    Go check out what happened to Denver in regard to printing more land... All that happened was the middle class and poor got dislodged out of the city, developers preferred to build luxury high rises for the rich, low end property development for poorer folks got shunned by developers because it isnt profitable enough...

    Until the rich fear the poor, nothing is going to change.....
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