View Poll Results: Hong Kong Property Bubble burst - 2011

Voters
50. You may not vote on this poll
  • There is no Property Bubble

    9 18.00%
  • May burst by end of 2011

    8 16.00%
  • May burst by end of 2012

    17 34.00%
  • May burst by end of 2014

    3 6.00%
  • May burst by end of 2016

    3 6.00%
  • No Clue - Try your luck by investing !!

    10 20.00%
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Hong Kong Property bubble

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  1. #11

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    Sheesh, I don't know why I bother.

    Football16, maybe you'd like to actually read the post rather than arguing with your own imagination as per usual. Nothing in the post suggested that there was a connection between democracy and housing prices. The point was that if you can't democratically choose another government if you don't like the nature of the current government's intervention in the property market then direct protest in an attempt to influence the policy of the government is the only option available.

    gilleshk, maybe you'd like to actually read the post rather than arguing with your own imagination as per usual. Nothing in the post suggested asking the government to intervene more in the market, it argued precisely the opposite - that the government should intervene less in the market.

    The mere mentioning of democracy seems to tie both of you up in veritable knots of cognitive dissonance.

    TheBrit, Gatts and er2 like this.

  2. #12

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    Actually your post really argued nothing and simply blamed the government because the market is going up and alludes to some conspiracy theory that they can manipulate the prices at will to favor big developers with of course very little evidence to back it up... It's too bad that your arguments(or lack thereof) don't come close to matching your flowery vocabulary.

    Democracy is useful in keeping things in balance by swinging the pendulum from left to right. However, regardless of the people in power, there are debts to pay and favors to be repaid. The advantage is that over the years those favors don't always go the same way, the disadvantage is that is often 2 steps forward and 2 steps back, very little gets done and a lot of money is spent in vain. Would HK be better off if it had free elections? I doubt it but it might appease the masses every few years...

    India has had freeish elections for a long time, China hasn't... China probably suffered more earlier on but they are currently vaulting ahead of India in just about every development indicator. Democracy or not, you're at the mercy of poor leadership...


  3. #13

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    Quote Originally Posted by randy1
    Prices will likely keep rising. There is so much cash from china sloshing around. And USA is continuing to extend low interest rates. Indeed to preserve the value of your cash and stop it being diluted one could argue that the worst thing to do is save cash right now. Rather u need to be invested in something. And with property u get good leverage so it's a nice asset to buy to protect and enhance your wealth.
    Spoken like a true victim of the bubble mentality. China and HK both are experiencing a property bubble which is unsustainable (pretty clearly based on miniscule rental values - getting a 2% gross rental return is the 'norm' these days), and as the economist Herbert Stein once said, "anything that can't continue forever, will stop." Property is only worth what someone will pay for the use of the property; if you can't get better than a 2% return, something is very wrong.

    On the face of it HK property is driven by a combination of a purposely-managed supply of housing to maximize the tax from land sales and a seemingly endless parade of (generally corrupt) cashed-up Mainlanders buying properties and letting them sit empty. It's understandable, since the goverment essentially takes depositors' money and gives it to the SOEs while paying the savers nothing in return; but in the long run it is probably better to hold onto RMBs. While one should probably be a bull on China for the long term, there is going to be a massive and painful correction in the financial and property sectors, and that includes HK. There may be some wrenching and possibly violent changes ahead on the Mainland once it all comes crashing down.
    Morrison and yellowtip like this.

  4. #14

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    btw, I miss the option " No Clue - be patient, be patient, be patient wait until it bursts, then buy in !!"

    Actually, if OP writes " No Clue - Try your luck by investing !!" then this is just another indication of how agitated people are = bubble mentality.
    It is the same mentality as during the height of China's stock bubble, no clue, buy in first,
    secure your share of the fortune first, and learn the basics of stock investment later.

    And one more thing I would like to add, people very easily believe that a nation is developed, has a stable economy and that nothing big will happen.
    E.g. South Korea, Taiwan, Thailand pre 1997.

    Last edited by Morrison; 01-05-2011 at 06:31 AM.

  5. #15

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    One of the funny thing is that this is the same government that's been in place since 1997 with the same policies(thanks to the lack of democracy pointed out). How is it that they manipulate the market now but they couldn't do it in the 10 years after that when nothing much was happening? Now that prices are rising a little too fast, it's suddenly their fault? What new policies have been put in place recently that would demonstrate that so called collusion? As a matter of fact, they took steps to cool the market a few months back. It seemed not to have had much effect yet but they were certainly not policies favoring developers.

    Are there any governments who don't manage and zone the land? The rise in prices has very little to do with the government and mostly to do with the current economic climate with very low interest rates which the HK government has little to do with. Many cities in Canada, Australia and New Zealand have experienced heavy growth and as I've said many times, doomsayers have talked about bubble bursting in Vancouver for 20 years and it never happened.

    The only thing we can say about the prices of today is that the valuation is very high and that the kind of recent growth we've had is unlikely to continue for much longer. Only the future will tell if it's a so called bubble. Prices could very well simply plateau and experience minor corrections for years as other markets have done, it may also come crashing if interest rates rise to a significantly higher level. The point is that anyone that claims to know what's going to happen is simply full of shtt either way. People predicting crashes are like people predicting rain, if you say it all the time, it eventually comes true but it doesn't make them visionaries...People constantly predicting growth are a little bit like those pyramid schemers and no one wants to be at the bottom of that one and left holding the bag.

    At the end of the day, investment should always be with a long term view. Historically, just about everyone makes money if they can wait out the bad times. The ones that suffer are generally the ones that are too greedy that try to cash in on rapid growth by overextending themselves.

    There are not too many properties I would consider buying at the moment however something like SHK Latitude in Kai Tak shows promise in the long term. Valuations are not as high there and the area is relatively undeveloped and set to experience a lot of change including a direct train to Central in a few years and the development of the old airport with "guaranteed"(if there is such a thing in HK) unobstructed views due to the current plan. However, if I were to buy there, it would be with a view of making a profit in 10-20 years, there's a far greater chance that the market will experience some growth within that longer time frame and hopefully benefit from the changes that will occur.


  6. #16
    Mat
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    I repeat once and again, not everywhere in HK is the same....Western NT for example the prices are still 36% lower than in 97 so we are far from those so called 97 prices in SOME area....in others (especially the island) yes prices are v high.

    and I repeat once again it also depends for what purpose you buy, what time frame, your personal situation.....there is no "one" answer.

    Do your own research (it takes time).....do not rely on Forum posters who have interest in either prices going up or down.....

    FT: In HK ppl usually do not buy for the rental yield...they buy and sell.


  7. #17

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    Quote Originally Posted by gilleshk
    The only thing we can say about the prices of today is that the valuation is very high and that the kind of recent growth we've had is unlikely to continue for much longer. Only the future will tell if it's a so called bubble. Prices could very well simply plateau and experience minor corrections for years as other markets have done, it may also come crashing if interest rates rise to a significantly higher level. The point is that anyone that claims to know what's going to happen is simply full of shtt either way. People predicting crashes are like people predicting rain, if you say it all the time, it eventually comes true but it doesn't make them visionaries...People constantly predicting growth are a little bit like those pyramid schemers and no one wants to be at the bottom of that one and left holding the bag.

    At the end of the day, investment should always be with a long term view. Historically, just about everyone makes money if they can wait out the bad times. The ones that suffer are generally the ones that are too greedy that try to cash in on rapid growth by overextending themselves.

    There are not too many properties I would consider buying at the moment however something like SHK Latitude in Kai Tak shows promise in the long term. Valuations are not as high there and the area is relatively undeveloped and set to experience a lot of change including a direct train to Central in a few years and the development of the old airport with "guaranteed"(if there is such a thing in HK) unobstructed views due to the current plan. However, if I were to buy there, it would be with a view of making a profit in 10-20 years, there's a far greater chance that the market will experience some growth within that longer time frame and hopefully benefit from the changes that will occur.
    Pretty much completely agree with you there, gilleshk (although I don't think there is much doubt about the bubble part; the math is just too compelling).

    You are right in that 'predicting' the timing of the bubble burst is more difficult than noting that there is one. Every time a bubble happens, there are endless excuses proffered about why 'it's different this time.' As bubbles continue, they tend to last longer than the pessimists thought was possible, which of course makes everone believe that things really are different. But they never are.

    Could one make money in the short-term flipping in this market? Very possibly. As noted, no one knows when the merry-go-round will stop. This is commonly referred to as the 'bigger fool theory' of investing. Still, someone who borrows to the hilt to invest in this market would probably be better off taking the money over to Macau and gambling it there - you could at least calculate the odds there.

    I also agree with you that i.) if one takes the long term view, ii.) one doesn't overleverage (i.e. you invest your own money and not someone else's which is unfortunately rarely the case), and iii.) one searches for the 'right' opportunity, there are probably still opportunties out there. Of course, there will almost certainly be more opportunities later.

  8. #18

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    Quote Originally Posted by Mat
    FT: In HK ppl usually do not buy for the rental yield...they buy and sell.
    My point exactly (which you apprently didn't understand). That is what is called 'flipping', and it is the financial equivalent of picking up pennies in front of a steam roller. Refer to my post above - property is only worth what someone will pay for the use of the property (i.e., rent). If the yields are low, prices will be coming down.

  9. #19

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    How does one know it's a bubble if it doesn't burst? What if prices simply stabilize and remain where they are now and have minor corrections and slow growth like it did for about 10 years after '97? Who is to know if and when there will be a crash? I'm sure there will be another major crash but it could be years before it happens... Obviously no one expect the kind of growth that took place recently to continue and both the chinese and HK governments are putting the brakes to try to avoid inflation. The US appears determined to keep interest rates low so I believe a "burst" is unlikely in the near future unless some catastrophic event happens but there are signs of the market leveling off... Also worth noting that unlike in many western countries, the region is trying to keep borrowing and deficits low which I believe is a sound strategy.

    I understand the attraction of flipping, you can have actual returns of well over 100% and even make money from simply using the equity from other properties without forking any cash out. The lucky ones that get the timing right can make a lot of money from actually investing very little. However, you can also be left holding the bag and then you look pretty foolish. There will always be winners and losers...

    It's worth noting that rental yields are catching up. My landlord expect a 50-80% increase, I proposed 20% and was rejected flatly so it looks like I'll be moving. Unlike many regions, HK doesn't have any rent controls/restrictions. Where I grew up, a landlord may not raise by more than a few % every year unless extensive renovations were undertaken. I believe that's generally a good thing and it tends to keep property prices more stable. In any case, some properties are more attractive for their rental yields while others have more capital gain growth potential.


  10. #20

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    Highly recommend watching a.documentary called Inside Job if you think that democracy will fix financial problems.

    The bankers and property guys own both sides of the fence and often the fence.

    TigerSun, Skyhook and hullexile like this.

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