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Is it even possible for HK property prices to go flat or down?

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  1. #21

    Only on an expats forum can you read such extraordinary nonsense as HK’s property market is still affordable...

    With a multiplier of 20x average annual salary for an averagely priced property, HK is the least affordable city in the world (London which is also considered completely unaffordable for locals has a multiplier of “only” 10).

    Parralel universe indeed!


  2. #22

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    I bought my flat in 2009 to live in just because rent is so damn high here and I hoped the property would hold it’s value and then I’d be happy saving a fortune paying mortgage interest rather than rent.

    Little did I know the property would increase in value by $900k per year on average over the last 9 years. This is fantastic! It’s like having an extra income in the family. I love that HK property prices are rising so much every year!

    Aren’t the majority of people like me? At any given point in time, aren’t there are more property owners happy with rising prices than there are prospective buyers grumbling about how high prices are? So what’s the problem? Keep prices rising higher and higher and make more people happy than unhappy?

    MandM! and orel100x like this.

  3. #23

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    Quote Originally Posted by bdw:
    I bought my flat in 2009 to live in just because rent is so damn high here and I hoped the property would hold it’s value and then I’d be happy saving a fortune paying mortgage interest rather than rent.

    Little did I know the property would increase in value by $900k per year on average over the last 9 years. This is fantastic! It’s like having an extra income in the family. I love that HK property prices are rising so much every year!

    Aren’t the majority of people like me? At any given point in time, aren’t there are more property owners happy with rising prices than there are prospective buyers grumbling about how high prices are? So what’s the problem? Keep prices rising higher and higher and make more people happy than unhappy?
    IMO skyrocketing prices of my sole property in hk don't really add much to the quality of life. Even if I sell it today at a profit, I still need a place to live in and other properties have risen at a similar rate, if not faster. It would only be beneficial for me, if I plan to leave hk for never ti return, otherwise it's just the numbers ticking and nothing more.

  4. #24

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    People who complain about property prices likely never have the balls to buy one to begin with. You can complain or you can adjust and make way.

    Property in NY and SF is MORE expensive. It's naive saying it's cheaper. You have to look at the whole picture. Mortgage qualifying is more difficult in the states where you can spend about 30% of your salary on your mortgage including taxes and any association dues. Now it's almost 5% interest in US. In HK you have more buying power and lower rates 2.15%.

    So in fact any person promoting US property is prompting more money to go to the banks, agents (6-7%) and loan officers (3%) where in HK you can keep most of your money.

    In SF a burnt out property just sold for 1m cash. Any cheaper places you promote are in dangerous areas where your car will get busted into and likely you'll be a minority, schools follow where you live so they are less desirable. If you want that. HK is great in that it's safe everywhere and you can easily fit in.

    So in these hot markets you are competiting with cash buyers which has been an issue for a long time now. Since offers are based on mortgage contingency, sellers in these markets only consider cash deals. Whereas in HK you have a free chance as it's your issue where the money comes from and the seller doesn't ask for mortgage approvals or proof of funds, which they do in the states.

    So yes you can buy a burnt out home that's needs full rehab for 1m USD cash then have a 30k+ USD tax bill every year on top of insurance. In NY many of the 2 bedroom flats have monthly maintenance fees of US$5,000 per month.

    How is that affordable or sustainable if you one day wanted to retire.


  5. #25

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    Quote Originally Posted by Jaz Paul:
    IMO skyrocketing prices of my sole property in hk don't really add much to the quality of life. Even if I sell it today at a profit, I still need a place to live in and other properties have risen at a similar rate, if not faster. It would only be beneficial for me, if I plan to leave hk for never ti return, otherwise it's just the numbers ticking and nothing more.
    You can re-mortgage your property and put that equity to work. So yes it is beneficial. Cash is still king.

  6. #26

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    A family earning 120k USD wants to buy a property. After 15% taxes, the family has US$8,500 per month and medical care (not great but they won't lose their house if one got cancer).

    Hong Kong
    Price: USD$775,000
    Cash needed
    25% : US $193,000
    20% down + 1% agent + 4% stamp

    Monthly expenses
    $2300 mortgage (30yr at 2.15%)
    $250 management fee
    $400 yearly taxes $200 month utilities
    Total $3150 per month

    * About 15k USD per year in the beginning goes towards equity.

    US - the family could only qualify for US$400,000 property due to their low salary. But let's say 775k for comparison. A family earning US $120k per year can expect to pay about 35-40% taxes (federal + state) leaving them with $78k per year or $6500 per month. Insurance for a family would easily cost $1000-1500 per month.

    Cash needed 20% down conventional loan
    US$155k
    Roll the other costs into the loan 3% closing costs

    $638,000 loan 5% over 30 years
    Mortgage $3425
    Property Taxes 2% $15500 per year ($1291 per month) * property taxes vary by state and could be much higher or lower usually depending on the school system (if it's good then you pay more)
    Utilities ($300-500/month) * my heating bill in the winter would easily be $1000 per month
    Association dues (assume it's a house with no dues)
    Total $5000-5200 per month

    * Due to the high costs, interest rates, a very small portion is applied towards equity every month.

    Now a US family likely pays $150-200 per month for 3-4 mobile phones, $100 per month internet / cable, car payment $300-600 per month, car insurance $200-300 per month.

    Now at this point still uninsured and didn't even count in food costs.

    Clearly shows why most Americans live check to check and their money is already dictated where and how it will be spent.

    The answer is clear to me. HK is better value and bang for your buck. Also the upkeep and maintenance of a HK property is SO much easier and cheaper than US properties. Now rental returns are much higher in the US, but that's another story.


  7. #27
    Original Post Deleted
    I just finished shaking my head in disbelieve after reading her post and thinking about replying in detail but then realized it's simply way too much effort to counter.
    TheBrit and kittykaitak like this.

  8. #28

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    He must have hit his head somewhere.

    To stay with your SFO example

    The median income for those areas is $115,300
    In HK it is
    a median monthly income of HK$16,800
    or roughly 25,000 USD per year, not even a quarter of the SFO figure. Even the lower interest rate and taxes won't make up for that difference.

    The average square foot price in SFO area is $1,150 while in HK it is ~$1,550.

    https://www.mercurynews.com/2017/04/...ed-low-income/
    How Hong Kong is making it hard for young couples to make wedding plans ... and forces them to live apart after marriage | South China Morning Post

  9. #29
    Quote Originally Posted by mrgoodkat:
    He must have hit his head somewhere.

    To stay with your SFO example
    In HK it is or roughly 25,000 USD per year, not even a quarter of the SFO figure. Even the lower interest rate and taxes won't make up for that difference.

    The average square foot price in SFO area is $1,150 while in HK it is ~$1,550.

    https://www.mercurynews.com/2017/04/...ed-low-income/
    How Hong Kong is making it hard for young couples to make wedding plans ... and forces them to live apart after marriage | South China Morning Post
    You can't consider the median in Hong Kong as up to the median lives in public housing. Thus a median income of $16800 or $25000 per household is the minimum.

  10. #30
    Quote Originally Posted by civil_servant:
    You can't consider the median in Hong Kong as up to the median lives in public housing. Thus a median income of $16800 or $25000 per household is the minimum.
    You give a whole new meaning to the world of statistics.

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