Property prices cristal ball for the next 4 months?

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  1. #41

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    Quote Originally Posted by Mr. No:
    Yes, I am attempting to calculate some form of return on investment because I would buy the flat as an investment.

    So in terms of return on investment I am right?

    I think even if you look at rental yield you shouldn't take the price of the property but your down payment. The price of the property is irrelevant.
    I didn't look in detail to be honest. You're free to calculate whatever ratio you like to use for your investment decision.... the rest of the world uses rental yield as a valuation measure.

  2. #42

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    Quote Originally Posted by Geoff:
    the rest of the world uses rental yield as a valuation measure.
    The rest of your world might. For me the return on investment is far more interesting. Essentially I have a specific sum of money to invest - what I am interested in is the best return I can get for that. The great thing about property is that you can get very high leverage (85% mortgages) at very low cost (2.5% per year). That isn't easy to do for many other types of investment.

  3. #43

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    Quote Originally Posted by PDLM:
    The rest of your world might. For me the return on investment is far more interesting. Essentially I have a specific sum of money to invest - what I am interested in is the best return I can get for that. The great thing about property is that you can get very high leverage (85% mortgages) at very low cost (2.5% per year). That isn't easy to do for many other types of investment.
    Good luck calculating it with floating interest rates & unknown property price movements. Those two things alone make a complete mockery of any predicted ROI.

    For leverage, I don't know what world you are living in but I can easily leverage my investment to buy bonds, buy equities, speculate on forex or probably any other type of investment I choose. There are even EFT's that give you leverage now, without even considering margin trading or call/put options.

    Property is hardly unique in it's ability to lever up your capital and make outsize positive or negative returns.

  4. #44

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    Quote Originally Posted by Geoff:
    Good luck calculating it with floating interest rates & unknown property price movements. Those two things alone make a complete mockery of any predicted ROI.

    For leverage, I don't know what world you are living in but I can easily leverage my investment to buy bonds, buy equities, speculate on forex or probably any other type of investment I choose. There are even EFT's that give you leverage now, without even considering margin trading or call/put options.

    Property is hardly unique in it's ability to lever up your capital and make outsize positive or negative returns.
    It's no harder to calculate than any other predictions. You can also have fixed mortgages and the price of the property doesn't have anything to do with your return until you sell it.

    It does make sense for an individual to look at the ROI for any kind of investment including property. Rental yield is better when you analyze a market as opposed to an individual property.

    As for leveraging, the call comes a lot quicker than on a property so the risk is higher.

    In any case, property is almost always a good investment in the long run and it's not a bad idea to have some to diversify. Discounting one kind of investment over another is very narrow minded as there are advantages and disadvantages to any investment vehicles and depending on timing and individuals, they might or might not be right.

  5. #45

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    Quote Originally Posted by gilleshk:
    It's no harder to calculate than any other predictions. You can also have fixed mortgages and the price of the property doesn't have anything to do with your return until you sell it.

    It does make sense for an individual to look at the ROI for any kind of investment including property. Rental yield is better when you analyze a market as opposed to an individual property.
    Yes, this is true. Another trouble with ROI is it depends a lot on things specific to one person - like the rate they can borrow at. For one investor, this might be very different to another investor. Lendors can also offer different terms on one type of property to another.Also, you can artificially inflate the ROI by borrowing more and amping the risk up. As such, my view is that it is a fairly meaningless measure.

    Using yield has the advantage of ignoring these and means it is easy to compare quickly across properties and markets.

    Quote Originally Posted by gilleshk:
    As for leveraging, the call comes a lot quicker than on a property so the risk is higher.
    Although you have to keep paying monthly mortgage payments on a property which could be sat void.

    Quote Originally Posted by gilleshk:
    In any case, property is almost always a good investment in the long run and it's not a bad idea to have some to diversify.
    I couldn't agree more. I have a decent chunk of my net wealth tied up in several properties.

    Quote Originally Posted by gilleshk:
    Discounting one kind of investment over another is very narrow minded as there are advantages and disadvantages to any investment vehicles and depending on timing and individuals, they might or might not be right.
    Just to be clear, I am not discounting property as an investment. I wouldn't personally buy properties in HK at the current valuations, but I fully agree that property should be an integral part of most people's investment portfolios.

  6. #46

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    Quote Originally Posted by Geoff:
    I think the yield is much lower, much like 3% - at least at the market segment I looked at.

    Equities, corporate bonds and even some AAA rated government debt yields more than that.
    My properties yield 5% of the current price, around 10% of the actual purchase price. It's older buildings, in a good location (TST). Even in a new commercial developement in Kowloon Bay 5% rental return is in the reach. The property has appreciated about 15% in the last 6 months (since the purchase).
    Last edited by hktraveller; 16-10-2009 at 01:02 AM.

  7. #47

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    That is good to hear... I was looking for larger properties on HK island which maybe a different segment. As an example:

    Gross yield 3.3%

    University Heights Tower 1, High rise building, sale, 23 Pokfield Rd., Kennedy Town | Century 21 Island West Realty Agency


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