[PDLM]

Originally Posted by Boris

up and down like a Wanchai hookers panties.

We can only bow to your experience on that one.

(missing apostrophe notwithstanding)

[freeier]

8-)
there is another irrational part of property in hk, or for that matter, singapore.

nobody in the market will ever tell you the property is going to correct:

1. the developers, obviously property to them are forever increasing in prices like how they want them priced.
2. agents, if they tell you the property might correct, would anyone buy.
3. newspaper and analyst, count the number of real estate advertisements and tell me how the papers are going to survive if property is to correct severely and no developer wants to sell units + advertise anymore.
4. government, one of the key revenue is land sales.

so, when you read people saying that 'for the long term, property is always worth investing'.. that's a sign of impending correction.

also check the haircut especially the more savvy local banks are giving on housing loans. when market is expected to go up, you might see 90~95% loans. when loans become 70% and strictly enforced, be wary.

[tvrlover]

Originally Posted by freeier

so, when you read people saying that 'for the long term, property is always worth investing'.. that's a sign of impending correction.
.

I was lucky enough to have once attended a seminar with Warren Buffett as one of the key speakers. He mentioned a man famed in the 1920s, Bernard Baruch (I did a bit of research on him later). Bernard Baruch was very famous for selling out his stock positions as soon as someone gave him a hot tip on the stock (going up soon ). Bernard considered 'hot tips' time to call it quits when irrational buying or selling started. When he died, Baruch was considered one of the richest people in the states.

The irrational HK market will correct itself, but, then again, so does every capitalist market at some point. Bubbles don't last - they always burst.

[Boris]

tvrlover - I own property in China, both southern and northern as the returns are much higher in that market than HK in regards of the amount invested. All my properties are cash paid so I can get a good real return without having to pay banks any of my profits.
Min 25% asset increase PA with a rental return of 7% net

Its irrational for us to buy here as we move a lot. 2006 was spent in Northern China and 2008 may reveal a move to Macau or at least continual back and forth.
I was a property developer in the UK before moving here also and like to see my money go into high profit projects, not sitting on something that moves up and down with the tide. I have never held onto any property for more than two years. My rental returns from the mainland + the items I still have in the UK means I can essentially live here for free whilst gaining a great % on the established assets. We all have our own strategy and each to his own.

My comments are made because the data just not support the theory.

FYI - my wife is a property consultant here so I have ( at last ) access to information and opportunities on an inside track. Maybe we WILL buy this year as the projected rate drop will provide an opportunity if we can find a good fixed rate financial product to hitch our wagon to. ALSO we are selling our properties on the mainland ( starting in March ) in what we feel in the " last hurrah " of the property boom for a while. The cash has to go somewhere other than fixed term deposits.

HK'ers could almost also be called property geeks. There is nothing they do not appear savvy too. Even the most uneducated have a real good grasp of what property or land is worth. Thats why we have found in the past it almost impossible to get a good deal or get into a situation to turn a property and realise a good margin in the time between trough and peak. Your friends idea of buying property on high APR loans is not uncommon and should be avoided, as you say. NOW, for us, its different and we have access to situations where its possible to do, what I did before, with acceptable margins, in new and high sought locations for less than a million USD. This market turns at around 20% net which fits my strategy.

As I said - each to his own BUT understand the market first.

[coolgirl]

At the end of the day we can overanalyze and bombard ourselves with lots of theories about it. There's no hard and fast rule. I bought and sold within a year with a +40% profit. Just lucky I guess

[yellowtip]

An interesting thread this is...

In my opinion, it kinda reflects the current attitude in the market. One group of people is shouting that this year property prices will rise with 20-30% and another group of people is shouting that the bubble will burst after the summer.

Personally, it's driving me absolutely and totally crazy.

I'm not one of you rich guys with major property investments all over the world. I'm a small guy that has worked his @$$ off in the last year to save the large amount of cash that is needed to buy a first property.

If I would buy in the next few months on a high, and the market would correct after the summer, I would be devastated. I know it's all profit/loss on paper until you actually sell... but still!

I was around in 1997 when I saw an uncle of my wife purchase an apartment in Shatin for 6,5m. It's now worth 5m and because of it, he couldn't retire at the age that he planned.

To be quite honest, I find that talking to foreign people about the HK property market is very risky. My gut feeling tells me that somehow it takes HK blood to understand this crazy property market.

For example, us foreigners can depend only on newspapers like SCMP for market information. In my opinion, this newspaper is extremely biased in favor of property developers and property agents. It seems that every week the compulsory article is published where they predict the property market to go up with 10-20-30%. Ironically, they base these articles on quotes from property agents and property developers. Have you EVER, EVERY and I really mean EVER! heard a property agent or developer say that prices would go down???

Since I have a HK wife, I always like to listed to what her HK friends have to say about the market. For the past year, they were all very optimistic. They would encourage us to buy now and they would have all sorts of recommendations on where we should buy.

The past week or two however, their sentiment has changed. They too now are talking about a market correction after the olympics and recommend us NOT to buy at this point. They all say we should wait 6 to 8 months.

Personally, I don't see what the connection is between the Olympics and the property market. What I do see is that the different properties that I have been evaluating have been rising in price 5-10% per month!!! since last December.

At points when I was ready to buy, I would go to the owner with the property agent to write him a check for his asking price, only to find out that the owner raised the price with another 5%.

To me, these are all signs of bubble behavior... but hey...what do I know?

For me, there's high risk either way, if I buy now, I run the risk that in 6 months time, my property will lose 20% of it's value (if not more). If I wait however.. and the market does NOT correct after the summer, I'm faced with the situation that the appartments I'm looking at are out of my budget.

What to do, what to do??

[Boris]

I think you see thing correctly.

At the end of 07 it maybe "might" have been ok to buy. Since January and CNY there has been a general upward correction in the general market and householders and / or the small developers are playing chicken. However I am sure you are aware that advertised prices are not indicative of the true negotiated prices. Look at the transaction histories to get a true picture.

The Olympic rubbish is local urban myth, emminating from the mainland market. They hear it from someone, who hears it, who hears it etc etc. You get the same thing on the local stock market and at the race track. You must notice the " endearing " habit of locals peering into your shopping bag or listening to your conversations. Its the same generallity.
Say something enough and some idiot will believe it !

Sentiment in the market appears to be -- put it up for sale but don't sell it.

Examples
A fellow member and I came upon a prime piece of land in his village. For sale board etc. Called the agent, who called the owner, who wasn't going to sell it - now.
The same member was also gob smacked when he learnt of the asking price of two houses we had both seen and I inquired with agent with. Well in excess of the supposed local norm.
My wife ( property agent ) who comes home every night in frustration that she could have done sales that day but the seller was playing silly buggers. THAT is also appearing in the rental market. The conversations goes Yes, Yes, Yes, All Agreed?, Yes -- BUT.

So yes, your feelings ARE valid. I also agree your comments about the " professionals " giving quotes in the media. Very Harry Potter but par for the course not just in property.

[yellowtip]

Originally Posted by Boris

I think you see thing correctly.

At the end of 07 it maybe "might" have been ok to buy. Since January and CNY there has been a general upward correction in the general market and householders and / or the small developers are playing chicken. However I am sure you are aware that advertised prices are not indicative of the true negotiated prices. Look at the transaction histories to get a true picture.

Ahh... the transaction histories. Gotta love those figures.

First, I highly suspect that many property agents concoct their own transaction figures that are much higher than the real ones. Before I talk to any property agent about a property, I always like to print out the transaction figures of that building. Whenever I show them this list however, they always look at it dazed and confused, and mumble that it can't be correct. Then they produce their own sheet with much higher figures. Has has happened to me on at least 5 occasions now.

Same thing goes for the property prices they state on their website. I print them out, take them to the agency, and suddenly all the attractively priced ones have either already been sold or they "can't contact the vendor". The alternative properties they then present me with are at least 20% higher in price.

My strategy as of late is to stay completely out of the equation and let my HK wife go there and do the talking/negotiating. I strongly feel that every time they see a "Guai Lo", prices get raised by at least 20% and/or room for negotiation disappears.

Same thing goes for the banks. I used to do all the talking with them as I have always done this back in Europe. Here however, being a "Guai Lo" makes a HK bank paranoid about your proof of income and all sorts of other things. Suddenly everything is difficult and they can't answer any basic question without picking up the phone and calling the credit department. Extremely frustrating indeed.

Originally Posted by Boris

The Olympic rubbish is local urban myth, emminating from the mainland market. They hear it from someone, who hears it, who hears it etc etc. You get the same thing on the local stock market and at the race track. You must notice the " endearing " habit of locals peering into your shopping bag or listening to your conversations. Its the same generallity.
Say something enough and some idiot will believe it !

Wether the Olympic link is true or not (personally I don't think there's any link), I can't ignore the fact that the property market seems to be in a bubble right now. Question is ...when will it burst?

Originally Posted by Boris

Sentiment in the market appears to be -- put it up for sale but don't sell it.

Examples
A fellow member and I came upon a prime piece of land in his village. For sale board etc. Called the agent, who called the owner, who wasn't going to sell it - now.
The same member was also gob smacked when he learnt of the asking price of two houses we had both seen and I inquired with agent with. Well in excess of the supposed local norm.
My wife ( property agent ) who comes home every night in frustration that she could have done sales that day but the seller was playing silly buggers. THAT is also appearing in the rental market. The conversations goes Yes, Yes, Yes, All Agreed?, Yes -- BUT.

Boy does that sound familiar! I have wasted so much time and energy already with this in the past 2 months! Especially the "Yes,Yes,Yes, Al Agreed?, Yes -- BUT" situation. In my case the BUT was usually that they added 5% to the price at the 11th hour!

Originally Posted by Boris

So yes, your feelings ARE valid. I also agree your comments about the " professionals " giving quotes in the media. Very Harry Potter but par for the course not just in property.

So, since the name of this thread includes the words "Crystal Ball", where do you see things going from here?

1. Downward correction in second half of this year (the bubble bursts).
2. Further raising of prices for at least another year (the bubble keeps growing ..perhaps it wasn't a bubble after all?).
3. A stabilization of prices in the second half of this year (Prices stabilize at a new newly found market equilibrium and stay there for a year or so).

So, who dares to make a prediction here? I dare you!

[Lammarite]

Originally Posted by yellowtip

Whether the Olympic link is true or not (personally I don't think there's any link), I can't ignore the fact that the property market seems to be in a bubble right now. Question is ...when will it burst?

I think we have discovered that in HK there doesn't have to be a tenable link between an action and a reaction- if enough people believe that there is a link between the olympics and property rates...there will be one.
Going back to Meerkat- did you end up with somewhere up here after all? In hindsight it was a great time to buy!

[PerryCo]

My favorite story when living in China:

"One day a distraught boy approached his mother and sobbed that his father had touched a live wire and was electrocuted, to which the mother replied, "Thank God! There's electricity! Did you get the Olympics ticket out of his pocket?"

In China, the government takes care of everyone. No one will ever go without help.