Like Tree33Likes

Buying a Flat at this time

Closed Thread
Page 1 of 2 1 2 LastLast
  1. #1

    Join Date
    Jun 2016
    Posts
    1,972

    Buying a Flat at this time

    given the current situation. Economy, trade war, democracy, 2047, virus. I've read someone on the topic from the pundits but want to hear the thoughts of the average person here who is also seasoned in terms of HK property. I own properties abroad but would be a first timer buyer here. I'm a expat but my wife is a local. How would stamp duty affect us?

    Idea is to live in the flat but long term it would be a rental investment as we plan to leave HK in a few years.


  2. #2

    Join Date
    May 2012
    Posts
    1,186

    Anecdotal evidence: I have been trying to buy a flat for the past few months. Two landlords, since December, upped their asking price 1M (because they don't "want to sell at a discount because of the current situation"...). A third one said "I'll wait for HK to go back to its glory days".

    I something others have seen? everyone's predicting prices will go down, but for the few landlords I spoke to, prices have actually gone up
    ¯\_(ツ)_/¯


  3. #3

    Join Date
    Feb 2009
    Posts
    8,280

    Yep, I have an empty 3 bedroom flat in Olympic (since I left HK last December) and no chance I am selling now. The virus makes people stay at home, eat at home, work from home, so finally everyone realises how shit their homes are and want to upgrade to bigger and better homes now! Everyone is shit scared to go outside these days, so how on earth can home prices drop when everyone is being pushed into their homes!

    Finally I've just let my place out for $27k which is a few k less than I originally advertised for but I'm OK with that. Two year fixed lease, none of this bullshit 1 + 1 year. My tenant is probably smart and realises he's getting a bargain and locking it in for two years now while he can, I'm not the kind of LL to fret over a few k and would prefer to have him in there for 2 years rather than start negotiating again in a year, so all good for both of us I would say


  4. #4

    Join Date
    Aug 2012
    Location
    Location Location
    Posts
    1,201
    Quote Originally Posted by alexdown:
    Anecdotal evidence: I have been trying to buy a flat for the past few months. Two landlords, since December, upped their asking price 1M (because they don't "want to sell at a discount because of the current situation"...). A third one said "I'll wait for HK to go back to its glory days".

    I something others have seen? everyone's predicting prices will go down, but for the few landlords I spoke to, prices have actually gone up
    ¯\_(ツ)_/¯
    This is quite normal before a downturn.

    House prices tend to be very sticky. People are emotionally attached to the high price and will not sell at a discount unless they have to. So the first sign of a downturn is there are fewer properties on the market, so prices don't drop.

    Eventually, more and more people will be forced to sell. This will be due to lost employment/business, and natural attrition due to retirement and health.

    When substantial numbers need to sell, then prices drop. At that stage you may get people trying to quit the market and then that is a proper bust.

    That usually takes 2-3 years from the peak.

  5. #5

    Join Date
    Jun 2016
    Posts
    1,972
    Quote Originally Posted by greenmark:
    This is quite normal before a downturn.

    House prices tend to be very sticky. People are emotionally attached to the high price and will not sell at a discount unless they have to. So the first sign of a downturn is there are fewer properties on the market, so prices don't drop.

    Eventually, more and more people will be forced to sell. This will be due to lost employment/business, and natural attrition due to retirement and health.

    When substantial numbers need to sell, then prices drop. At that stage you may get people trying to quit the market and then that is a proper bust.

    That usually takes 2-3 years from the peak.
    This is what I am afraid of. I think from a behavioral standpoint, loss aversion is real and with all asset classes you have investros thinking they aren't taking a loss until they actually book it when they sell. But when the rush for the exits start its cataclysmic and the selloff is actually overdone. SARS kind of gave the poperty markets a history that there can be some kind of reversion but well also hard the backdrop of the China growth story to help. Im just not sure how to play this or how to read things.
    traineeinvestor likes this.

  6. #6
    Quote Originally Posted by alexdown:
    Anecdotal evidence: I have been trying to buy a flat for the past few months. Two landlords, since December, upped their asking price 1M (because they don't "want to sell at a discount because of the current situation"...). A third one said "I'll wait for HK to go back to its glory days".

    I something others have seen? everyone's predicting prices will go down, but for the few landlords I spoke to, prices have actually gone up
    ¯\_(ツ)_/¯
    I'm not seeing any evidence of prices going up in my corner of the SAR (HK Island) but I am hearing of a few investors sniffing around looking for bargains.

    FWIW, I think it's too early in the cycle for people to be panicking. Most people (myself included) expect the virus to burn itself out sooner or later. There's still a lot of negative news to come on the economic front as the impact of people losing jobs, working reduced hours, businesses failing, lower dividends and lower rents make themselves felt.

    Against that, there's the fact that a combination of just about all mortgages in HK being P+I with a typical term being 20 years and the very high deposit requirements which have been in place for several years now mean that lot of HK property owners have either no mortgages or very small mortgages relative to current property values. As long as these people have an income stream, they're under no pressure to sell.

    Obviously this doesn't apply to everyone so I'd expect that some people are feeling the pressure. Possibly those who purchased using a second mortgage and/or are in the process of losing their business or job.

    Another reason why people are reluctant to sell is the double stamp duty - if an investor sells then they have to contend with the double stamp duty if/when you want to buy back in. At the top end of the market, thats 8.5% which is a pretty big transaction cost. Owner/ occupiers who sell have the problem of finding somewhere to live.

    As a side note, the media and the real estate agents are doing their best to incite panic with reports about prices being "slashed" etc. So I went and had a look at what Midland had to offer in our development and, sure enough there several apartments with lines drawn through the type set asking price and a lower asking price handwritten on the flyer. One of them was for an identical unit to ours but, from the photos, a couple of floors lower down - the price had been "slashed" by a significant amount but was still a long way above the current bank valuations.
    shri, jack55, z754103 and 1 others like this.

  7. #7
    Quote Originally Posted by RMDNC:
    This is what I am afraid of. I think from a behavioral standpoint, loss aversion is real and with all asset classes you have investros thinking they aren't taking a loss until they actually book it when they sell. But when the rush for the exits start its cataclysmic and he selloff is actually overdone. SARS kind of gave the poperty markets a history that there can be some kind of reversion but well also hard the backdrop of the China growth story to help. Im just not sure how to play this.
    SARS came at the end of a multi-year downtrend following the Asian Financial Crisis when the market was already weak and a lot of people and businesses had been suffering economically speaking for some time. Sure, SARS had an effect but most of the decline in values from the 1997 peak had already happened.
    shri, RMDNC and jrkob like this.

  8. #8

    Join Date
    Nov 2007
    Location
    Wanchai
    Posts
    5,063
    Quote Originally Posted by bdw:
    Yep, I have an empty 3 bedroom flat in Olympic (since I left HK last December) and no chance I am selling now. The virus makes people stay at home, eat at home, work from home, so finally everyone realises how shit their homes are and want to upgrade to bigger and better homes now! Everyone is shit scared to go outside these days, so how on earth can home prices drop when everyone is being pushed into their homes!

    Finally I've just let my place out for $27k which is a few k less than I originally advertised for but I'm OK with that. Two year fixed lease, none of this bullshit 1 + 1 year. My tenant is probably smart and realises he's getting a bargain and locking it in for two years now while he can, I'm not the kind of LL to fret over a few k and would prefer to have him in there for 2 years rather than start negotiating again in a year, so all good for both of us I would say
    You should have told me, i would have paid 17k a month (after geoexpat mates rates discount of course)
    bdw and chuckster007 like this.

  9. #9

    Join Date
    Dec 2002
    Location
    θ–„ζ‰Άζž—
    Posts
    47,967
    Quote Originally Posted by alexdown:
    Anecdotal evidence: I have been trying to buy a flat for the past few months. Two landlords, since December, upped their asking price 1M (because they don't "want to sell at a discount because of the current situation"...). A third one said "I'll wait for HK to go back to its glory days".

    I something others have seen? everyone's predicting prices will go down, but for the few landlords I spoke to, prices have actually gone up
    [FONT="]¯\_([/FONT]ツ)_/¯
    I suspect prices will fall once the margin / loan guarantees are called in. During SARS many many properties that went on sale were due to distressed loans - business and speculative investments + people owning multiple properties because they were partying like it's 1999.

    At this point I am still speculating things will fall over the next few months - "give it time..."

    From the few pieces of info I have about manufacturing on China, the extent of the shutdown and the financial implications are yet to filter down because as a whole the systems are frozen and everything is at a standstill.
    traineeinvestor likes this.

  10. #10

    Join Date
    Aug 2007
    Posts
    1,192
    Quote Originally Posted by bdw:
    Yep, I have an empty 3 bedroom flat in Olympic (since I left HK last December) and no chance I am selling now. The virus makes people stay at home, eat at home, work from home, so finally everyone realises how shit their homes are and want to upgrade to bigger and better homes now! Everyone is shit scared to go outside these days, so how on earth can home prices drop when everyone is being pushed into their homes!

    Finally I've just let my place out for $27k which is a few k less than I originally advertised for but I'm OK with that. Two year fixed lease, none of this bullshit 1 + 1 year. My tenant is probably smart and realises he's getting a bargain and locking it in for two years now while he can, I'm not the kind of LL to fret over a few k and would prefer to have him in there for 2 years rather than start negotiating again in a year, so all good for both of us I would say
    Home prices can drop if there is a net loss of people in HK plus those staying downsizing due to economic circumstances. As for dropping rental accepted, new rentals dropping by 10%+ if trending will also impact on sales presumably.

Closed Thread
Page 1 of 2 1 2 LastLast