For sure I recognise the Mantra about buying houses - first heard it from my grandfather, it's certainly long-lived.  

But we all need to be careful about being the blind leading the blind - that sort of mindset can lead people down blind allies, especially when you think it's true.  Anyone who still thinks "the house you live in is your greatest asset" would do well to reconsider ... I know a number of friends who suffer genuine hardship as a result of that one ...

and given this is a punters' forum, which requires both the reality of disposable cash and therefore the capacity to generate large amounts of it at will, it shouldn't take much time to believe that a disproportionate number of the readership here do buy things that are a lot more expensive than the home they live in.  Yes, we probably have several people right here who buy companies, for example.

To my ongoing surprise I'm still not seeing a softening in the HK markets I'm tracking.  Yes the rate of growth has slowed, but buyers still seem to be active ... I know that first hand, not from the media.  

Watching very closely though

Anyone else got a perspective?

Buy buy buy!

There's a significant difference between the US and HK property prices. Whereas the US realty boom was driven purely by the bank's incessant desire to boost its loan figures by lowering its financing standards where even a strawberry picker in California can own a USD800,000 home and a stripper in Las Vegas can own 5 apartments and then repackaging the mortgages to institutions that have no idea what they are buying and passing it off themselves like a  game of hot potatoes, Hong Kong's realty boom is driven by a much scarier but predictable force, the powerful RMB. Unless Hong Kong restricts the flow of Mainland Chinese investment into HK property, the land in Hong Kong will only continue to go up.

There's 1.3 billion people in China. Let's use the figure of around 1% who are USD millionaires. That's still 1.3 million people in China who are USD millionaires. A lot of these 1.3 million millionaires would want to come down to HK, because it's the easiest way to getting a passport that allows them to travel freely around the world, and also the easiest place to get their RMB out of China. That 1.3 million people would increase HK's population to over 9 million people, making up 14% of the population. These people as well would all be focusing in on the >HKD6 million apartments so definitely anything above that range would certainly go up in price. Then there's the trickle down effect, whereby all those HK people that used to be able to afford the apartments that are now at >HKD6 million, they start buying up the HKD4 million apartments, and etc.

The only possibility of the HK market going down would be:

1) HK government restricts Mainland Chinese investment
2) China government opens up travel policy
3) Free float of RMB in international market
4) HK government colonizes the Senkaku islands and starts building up 1.3 million flats there.

Disclaimer: I bought last year when I thought the market was quite high, but it's gotten even higher since. Goes to show, don't try timing the market.

Certainly chelu, it could be a bubble. Anyone would be blind to not realize that the world operates in economic cycles. Even throughout Hong Kong's history there were several major stock market and real estate crashes. The difference between this time and previous times were that the bubbles were caused by pure speculation among a limited amount of HK investors. Was there real demand over a limited supply or was it fake demand? The current case now is that there is real demand, and lots of it. It's like a 100 people trying to fit through a door versus 1 person wearing an inflatable suit trying to fit through a door. Eventually the 100 people will dry up, and it'll trickle down to 4-5, or the door is closed completely, but regardless, I think this up cycles will certainly be a lot long than previous ones. The last mini-crash was during 2008, and the one before that was in 2003. Before that 1997 was the major crash, so in general we see the periods being 3-5 years. Perhaps with the Chinese investments we can see it being a 5 to 7 year cycle, so we can expect a crash in 2013 or 2015, but seeing that it's ticking up right now, perhaps there may be another 20-30% increase in prices before 2013, and the crash may readjust down 20-30% so you'd be even regardless.

Nothing will really be like the US market in 2007/2008 (at least not so soon), but that doesn't mean that the poor decision making that many individuals did during that time can't be repeated. Real estate is a type of investment and with all investments come risks, whether you understand them or not, but just make sure that you can handle it when the shit hits the fan and you're not forced to foreclose. Hence my encouragement that if this is your primary home, just make sure that you are financial sound enough to buy an apartment and don't try to time the market.

X-man, I'm not saying it is a bubble, but same thing is happening in Singapore and all over.  Prices in Singapore are through the roof mainly due to Chinese irrational (maybe rational) exuberance.

Hong Kong on its own has more buyers than sellers.  BUT this is mostly driven by Chinese excesses.

IF China catches a cold????

I'm just saying.

Che'lu

PS If you can afford to buy and hold, in the end it will be fine, IMHO

@ chelu - agreed. Value investing is always the best route to go.

@barg123 - definitely humans will always be and these mistakes are bound to happen again. Like the imperialists throughout history, England, Portugal, Spain, etc., no one ever stops conquering new territories goes back to their homeland and enjoy their fruits of labors. Everyone is always demanding more and more, which is the cause of these bubbles. To temper these bubble bursts is government regulation. The government needs to change the financial system so that the poor can no longer be raped by the financial institutions. Unfortunately, Obama has been too busy and greedy to really zero in on that one issue, and revolutionize the banking system in the US. Instead he dabbles in Iraq, healthcare, tax system, etc.

Huh?  Not quite sure I understand what you're saying - or if you actually understand what I wrote.

I said that in most cases, buying a house is probably the largest single PURCHASE for most people. And thus a bit ludricous that one would attempt to get advise on such a major thing.... from a punting board!!

And yes, of course I understand that house/apartment value does go up as well as down - and even though it may have been a guy's largest single purchase, it does NOT mean that it always remains the guy's largest single ASSET.  For indeed it could even be a liability - as per all these upside down mortgages in the U.S.!!

And as for funding punting - you gottta see that punting is just petty cash compared to price of housing - especially in Hong Kong.  And as for buying and selling companies - I know for a fact that it is a lot harder to actually accomplish - and thus I would rather think that there is NOT that many in the whole populace of the world who can actually trade companies.  It's not that simple.... not unless you're Mr. Li, Lee, Buffet, Kwok, Ho, Murdoch etc yourself; for the majority of us - its not that simple.

SEAJ

[ Last edited by  SEAJ at 19-4-2011 17:06 ]

The very fact that the RMB is going up and predicted to go up some more is NOT a reason for the Hong Kong property market to go up/have gone up. In fact the very opposite is true - for why should a Chinese go and sell off his RMB to buy property in Hong Kong which is valued in HK$ which in turn is linked to the ever weakening US$.

As for the quite irrational - and may I say, gaudy - method with which Chinese Nationals had been snapping up property in Hong Kong in the past few years - well, the tide could also easily turn. What goes up eventually must come down - there is no such thing as a one way street for prices - and when it starts to come down, many will rush out the same exit and we have a bust.

And like I stated previously, the largest worry as far as I'm concerned is the ridiculous low interest rate ALL OVER THE WORLD. Sure, when credit is so easy, everything goes up in value - real estate prime amongst them. But it is these very same price hikes that IS INFLATION.  And no nation in the world can afford to let inflation run away....and thus the definite spectre of higher interest rates in the near future which will SURELY kill off the real estate market.

And BTW - last night's S+P's lowered outlook for the U.S. economy - with the probability of the US loosing its AAA ratings within 2 years is something one should be afraid of...be very afraid of!

SEAJ

Sorry to single you out, this seems to be a common comment here  Yes, this is a punting board and it is the bread & butter of this board.  There is an eclectic group of people here that who has good advice despites the url up on top of our browsers.  Are there more sophisicated investors on a investor's forum or a personal broker?  Of course!  But you know what? I been there too and there are as much poor information out there whether I am on 141, investor forum or even my "professional" investor colleages.  At the end of the day, we should do our own homework & make best decisions based on our own.

I remember on various investors sites where people had 7 figure USD riding out in california real estates blasted me for saying that real estate was unsustainable.  I had dozens of people in person & online who jumped on the next big thing.  I even rememember my mortgage people was almost trying to convince me I was eligible to borrrow more just bc I was eligible....you know what?....Its borrow, not GIVE me freemoney. Anyways, you have to follow your own judgement & not the others....gotta weed out the crap out there.

Hear hear!

Couldn't have said it better myself!!

SEAJ

Hey SEAJ, one of the entertaining features of this forum is hearing such wildly differing opinions ... and in this case, boy, do I disagree with you!!

I happen to think that there are a number of very smart, very successful, and very wealthy people reading and contributing posts here.  If you think otherwise, you're either being disrespectful or just underestimating the qualities of your friends here.  Yes, there are all sorts, and maybe you're writing to impress the audience of impoverished youngsters who are also reading ..?

The cost of punting is NOT small change.  Sure, if you only go out once or twice a month, your budget may be comparable to your drinking budget.  But judging by reports, for most people their budget is more comparable to that of an enthusiastic and regular golfer.  Or someone who flies a light aircraft for leisure.  And some spend so much I get uncomfortable just thinking about it ... especially those guys who are also filling a role as provider to a traditional household at the same time ... and I admire that they are able to do it.  

So yes, I do believe this forum is a great place to ask questions that affect an ambitious and successful man.  Including investments and finances.  Don't trash it just because its primary focus is for sharing about paid sex.  

I for one am VERY interested to hear views expressed here about interest rates, inflation, commodity prices, social unrest, etc etc ... for sure, every smart contribution will be accompanied by 5 idiotic ones ... but - and here I agree with you and sirtiger - we are all going to make our own choices in the end, hopefully better informed by the active debate.  

Oh, and the house thing?  Yes, for most people a house is their biggest purchase ... except for those who actually spend more on their children's education ... or on taxes ... or on their mistress ... or ...

My point is that THINKING your home is SUPPOSED TO BE your biggest purchase automatically puts you in a blind alley and makes you a slave to the banks.  It's not our agenda, it's theirs.  My point is: make that choice if you want to, but make it deliberately not because everyone else is doing it.  For the wealthiest people it is DEFINITELY NOT TRUE that the house they live in is their biggest purchase, not by a long chalk.  AND a lot of wealthy people bought their expensive home way before it became expensive.  

Who do you choose to emulate??? That's my point ...

If you do the math there are many smarter choices than putting all your wealth into your home.  And no, I don't expect the majority to agree with me, I'm OK being in a minority here

I worry about professional investors ...

Consider this:-
  80% of trades are made by institutional investors ... i.e. the decision is made by a full-time employed professional investor ...
  Trading is a "zero-sum game" ... when the price changes one is a winner, one is a loser ...
  Therefore by definition 50% of the investment decisions are losing decisions ...
  Therefore professional investors are - on average - wrong 50% of the time

Really the only smart decisions a professional investor is making is
  1. to use your money not his own
  2. to be paid a salary not a % of profit
  3. to be employed in a sector that attracts the hard-earned capital of productive workers

Not someone I would ask for advice about my hard-earned captial    Seriously: most days I'd rather hear the advice of an active whore-boy than a professional investor

OK...granted that there are most likely smart, wealthy, successful individuals on this board - as there is in most boards - but they've come here NOT to discuss rocket science.  I'd think they're here - by the very nature of this particular board - to discuss sex and sex related topics!

I get on here - specifically to get away from doing too much of anything cerebral and actually use this activity to force myself away from watching the screen too closely; to make sure I just don't see the trees i/o the whole forest.

And anybody who would consider punting and golfing not small change - well... these guys should - IMHO - re-think their priorities in life! Don't know about light air crafts - but would think the same applies - as it should be, in the choices we have to make in life.  And you're totally mixing up the concept of ONE purchase versus a series of small purchases - totally different equations based upon a totally different set of circumstances/considerations AND life altering results.

And as far as being slave to the banks - you can only be a slave to the bank if you allow yourself to be a slave to them.  If you make better choices, you can very very easily TAKE ADVANTAGE OF THE BANKS.  THAT....is what makes a difference between smart and stupid.  Easy!

And on "emulating" - that is again my point: do NOT emulate others, be a free-thinker, make independent decisions, based upon facts and knowledge gleaned from one's own proper research, socio-economic studies, past experience/education etc.  And such just do NOT include opinions on a sex board.  And if you could even consider such information/opinion etc as being of any importance in your investment decisions...wellll.... I do wish you good luck...for that is all it would be if you did succeed!

Be really aware that all things being equal - investing IS a zero-sum game.  Usually there is only a 50-50 chance in making money - but to make the right decision...especially if it involves such a large purchase as a house - should be taken on with as much PROPER study as one can muster - and again it should not include anything from a totally unrelated sex board! One is only dumbing down the process by taking on opinion here.

SEAJ

With all due respect, investing does not have to be a zero sum game.

"Be really aware that all things being equal - investing IS a zero-sum game.  Usually there is only a 50-50 chance in making money - but to make the right decision...especially if it involves such a large purchase as a house -"

If you invest in something that is creating value, then your investment will grow.  This growth does not necessarily need to take value from someone or something else.  It is created.

You could buy stock from someone that has made money from it and hold it, have it appreciate and you too will make money.

OF course you can always fuck up and lose too.  

Just my $0.02

Che'lu

LOL- perhaps  D'art and I didn't really expand enough on this/just thought that everyone here already knows this ole shoe.

Investing being a zero sum game is a well trodden out and quite rational hypothesis of the reality in investing; Somebody just ALWAYS loses/loses out of whatever another one makes.

In your example - you buy something which grows in value = you've bought this something from somebody else ....who've now lost out on whatever he could have made if he had hung on to his investment.

That's all there is to this comfortable mantra.

SEAJ

I improve my chances beyond 50/50 by focusing on sectors I understand and making educated decisions based on this knowledge. If I am playing poker with one other person of equal skill, before the cards are dealt my chances of winning are 50/50. Once I get to see my cards, I have the option of playing or folding and that of itself increases my chances of NOT losing money.

complete bullshit SEAJ (something I can only say to a friend!)

TONS of investments create organic growth, generating a return for less than the input cost.  Start with farming, and go on from there to manufacturing (preferably the sustainable variety), and evolve into services ... etc

The entire essence of trade is to create a win / win - give something you don't need (usually because you already have enough of it) in exchange for something you do need (because you don't have enough of it).  
In fact, a couple of recent studies have shown how societies that become smaller or cut off from the wider world regress in their quality of life and their level of technology.  Fascinating topic ...

Win / Lose thinking sucks big time.    

Point I'm making about "professional investors" is that the wealthiest people in the world did NOT make their most valuable investment decisions based on the recommendations of professional investors.  Professional investors have their place, especially if you have spare cash you don't need just now.  But if you're looking for ideas about how you can make more than average wealth (ideas you will then consider and evaluate before making up your own mind what to do), getting the views of successful people - and in some cases doing whatever it was that they did on their way to becoming succesful - is a more effective formula.

HUH???  
YOU???
Also getting yourself befuddled with the old saw that investing is a zero sum game??

D'art - WAKE UP!! What you say is true for investing but has nothing to do with the old saw that"investing is a zero sum game"  Please read my reply to Chelu!

And I have no quarrels with your exhortation to NOT rely on supposed professionals ( I sent you a PM on this), AND getting the views of succesful people....the only thing I found totally wrong in your assertion is that 141 is a fabulous place to get these "views" of succesful people  

141 is a fabulous place to get info and views on SEX.  PERIOD!

Tsk Tsk Tsk!

SEAJ

SEAJ-

Please please tell me which way gold is going!!!  I want to invest and need your advise.

Che'lu