yeah, its nice how people can manipulate numbers and possibly purposely lacking information to suit their sides of the argument.
I would argue housing prices are just recovering than overheating.

stories in China seems to be spilling to HK as the same

Better to gamble in a casino or in the stock market than in real estate, especially if price and rents have decoupled.  Real Estate is too illiquid for anyone other than a pro, in my experience.  Although HK is probably similar to NYC/Boston/San Francisco in the USA.  It has so much going for it that it can defy the rules.

Nevermind, China two escort boats walking away from the Okinawan Islands, and PM of China and Japan are talking in Europe.
Looks like the Japanese and Chinese slowly backing away from conflict.  I'm sure later it will be a problem as natural gas locations are now the hot topic as China, south Korea, and Japan all claim same rights.

Did you ever think that would be an issue at all? China and Japan going to war is a most ludicrous idea in the current economic environment. Countries only go to war when they are economically desperate or in need of resources or more land. Two wealthy nations who are major trading partners do not go to war.

[ Last edited by  geoduck at 9-10-2010 09:06 ]

I agree that China and Japan engaging in a prolonged armed conflict as being ludicrous for all kinds of reasons, but if logic was the only reason states went to war then there would be few if any wars. It's usually as much about about political agendas and whipping an ignorant populace into an emotional lather as anything else. You only have to look at George W. and Iraq.

As stated in my post, countries would go to war for resources and that's why the US went after Iraq and subsequently the US military industrial complex keeps it going in Afghanistan. You can't go and bash a major power, particularly a trading partner. Yes, wars will continue in smaller countries in Africa but a major war could spell the end of life as we know it and everyone is too comfortable at the present time to allow that to happen.

[ Last edited by  geoduck at 9-10-2010 11:24 ]

Property prices cannot does up for never. When you find a lot new homes empty and waiting to tenant out, then that is the start of the crash. As many buyers are depending of rentals to cover their huge loan.

Agreed. But HK is awash with hot and cheap money at the moment and interest rates would not be going up any time soon. There isn't much else one could invest in even though prices are ridiculous. HK properties are also very liquid as compared to other cities in the world.

Agree on the low interest rates - that is definitely fuelling price rises.  

But there is a big counterbalance: at this time you need between 40% to 100% of the purchase price in cash.  Whereas before the crash - before 2009 - you could get a 70% mortgage easily, at this time you can't get better than a 60% mortgage.  This is a two-edged sword of course: those people who do have cash to buy an investment property are willing to pay a bit more, because the rental covers a bigger mortgage at the lower %s.  But it does also mean there's less leverage in the market.  

Less leverage means less risk, since the market would need to fall a long way or interest rates would need to rise further, before negative equity or negative cashflow forces owners to sell at a loss.  This means the risk of a slide is low, even if prices do plateau for a while.  

On the upside, the ongoing strength of the RMB and weakness of the USD that HKD is pegged to, makes HK property remain a very attractive safe haven for PRC cash.  

Anyone who has cash will put it into property, because rentals are still strong and more than cover mortgage payments.  You can buy at positive cashflow and walk away knowing you won't lose anything for at least 2 years (while the tenant is locked in).  And the uber-low interest rates on a HIBOR linked mortgage means more than 90% of the rental payments go to paying down principal of the loan not into paying interest ... as a result of which the investment buyer is protected against (typically) a 10% drop in prices before his deposit is reduced.  

Buyers who can pay the 60% also know that if there is ever any easing on lending by the banks - and mortgages rise to 65% or 70% - buyers will quickly start to bid more, fuelling speculation again.  Indications are that banks want to lend more, as evidenced by the effort they're beginning to make to lend to PRC buyers who in the past they refused outright.  Tenants will want to buy if they can because they can see mortgage payments are less than their rentals, and the smart ones also see that the interest rates are such a small % of their rental payments.  

Conclusion: strong upside both short and medium term, mitigated downside both short and medium term.  Everyone's making their own choices ...

Japan is playing the review the weapons export ban to damage relations.  It looks like Japan is going to start something else.  It could be a signal Japan is about to develop new weapons.

watching the Hang Seng going up these days, this may only continue the increase in property prices, what do you guys think?

Absolutely yes - always results in a flurry of transactions as the winners bank their cash in property as a long-term safe haven.

i agree. with USD falling so much in just a short period of time. it just means more liqudity will flush to emerging markets and Asia, specially HK because of the peg system. let's see will the government (coming wed) going to announce any measures to slow down the rising property prices.

Remember the pebble in the pond analogy. Those owning property within the first few rings (Hong Kong) be safe in a market correction will be safe those owning property in the outer rings are gonna be in trouble.

Interesting and informative read guys!
Not sure if this will fit into this thread but would any of you have any 'recommendations' for good properties / locations in HK (pref. Kowloon side) to invest?

I would have thought you'd be thinking twice before investing in HK after reading this thread.

How much do you have to spend?

there are good hong kong properties that start at $350k US

there are really cheap commercial spots, i saw going for $20k US - $30k US in Oil Street area

If NLion wants a good investment property, something nice and in demand in Tsimshatsui he would have to fork out at least US$0.4m cash and take out a bank loan for US$0.8m over 15 years. This will get him an apartment roughly 100 sqm and not in the top tier. He will have to spend some money for renovation and rent it out for at least US$6,500 a month just to cover his mortgage payments. If he cannot manage to rent it out then it's a bit of a financial burden.

For me, I would be a bit more patient. A buying opportunity comes every decade and since the last great buying opportunity was in 2003, I would prefer to keep the cash in short term investments and wait and see. Buying a property is a big ticket item and you must always think of the worst case scenario if there is a downturn. It all comes down to holding power.

[ Last edited by  geoduck at 12-10-2010 09:48 ]

That sounds too good to be true. I didn't know you can get a decent property for US$350k in HK. Maybe somewhere in the boondocks but definitely not TST. NLion wants a good investment and for US$350k, you won't be able to get a place bigger than 250 sqft net after you deduct the common areas (such as stairwell and lift halls). That's a lot smaller than some of the hotel rooms that the WGs occupy. It can hardly fit a decent size closet or a dining table. Maybe you can rent it out as a walkup.

Things are getting more interesting with now Vietnam entering the picture.

"Defense chiefs from the 10-member Association of Southeast Asian Nations (ASEAN), along with eight dialogue partners — Australia, China, India, Japan, New Zealand, Russia, South Korea, the United States — meet in the Vietnamese capital of Hanoi today. Upon observing the list of participants, which represents a miniature of the Asia-Pacific region, the meeting will essentially discuss issues involving strategic defense and security affairs in one of the most dynamic regions in the world.

A host of regional defense- and security-related problems are on the agenda, but the meeting — the first of such a regional defense meeting — will very likely be dominated by topics on China’s claims over disputed areas in South China Sea and assertiveness in the region despite assurance from the host country that the meeting would try to identify common interests and avoid becoming “a place for a war of words”.

So concerned was the US with the continuing tension in the region that US Secretary of State Hillary Clinton told an ASEAN regional security forum in Vietnam in July that the peaceful resolution of disputes over the Spratlys and Paracel island groups was in the American national interest. Her statement, however, has angered Beijing which then accused Washington of interfering in an Asian regional issue.

A number of incidents has heightened the tension in the region in the past weeks. On Sept. 8, a Chinese fishing boat captain was arrested after his boat collided with two Japanese patrol vessels near a chain of islands, called Diaoyu in China, and Senkaku in Japan. The islands, about 190 kilometers east of Taiwan, are controlled by Japan but are also claimed by Taiwan and China. The captain was released late last month.

Also in September, on the 11th, a Vietnamese fishing trawler was seized and its nine sailors were arrested by Chinese authorities for fishing near the Paracel Islands, disputed by China and Vietnam. The Vietnamese authorities have asked for the unconditional release of the arrested sailors.

The region is also prone to similar tension and potential disputes due to competing claims on the Spratlys Islands, which are claimed in whole or in part by four ASEAN members — Malaysia, the Philippines, Brunei Darussalam and Vietnam — plus China and Taiwan; and on the Scarborough Shoal, claimed by the Philippines and China.

Apart from the disputes in the greater Asia-Pacific region, territorial claims and disputes within ASEAN member countries also still threaten cohesion in the smaller Southeast Asian regional grouping. Indonesia, for instance, beside having border disputes with India, Papua New Guinea, Timor Leste and Australia, also has such disputes with Malaysia, Thailand, Singapore, Vietnam and the Philippines.

A tense and unstable Asia Pacific is obviously unwanted, not only by its member countries, but also by others with commercial interests in the region, which is rich in fishing areas and believed to contain huge oil and natural gas deposits. The region is also home to one of the world’s busiest and important commercial sea lanes, a crucial conduit for oil and other resources fueling the regional and global economy.

It is thus encouraging to see the initiatives taken to bring and settle all those territorial disputes through dialogue, such as the one starting in Hanoi today. But it is unreasonable to expect the Hanoi meeting be able to settle all those disputes overnight as there are still a lot of obstacles and problems that may hamper the process in the long run.

There is still a lot of disagreement and difference to settle. Hopefully, member countries in the region, particularly the meeting participants, have the long-lasting energy to proceed with fruitful talks in the future. Right now, it is too early to expect the forum to be established as a permanent one, like the one the region already has in the form of the Asia-Pacific Economic Cooperation forum.

But in the long run it is not wrong to expect that such a timely regional defense forum develops into a permanent one, authorized to settle all those problems and differences, with binding commitments among its member countries."