Outlook for the Hong Kong Property market 2014. Are HK property prices going up again?
I've received a number of emails since my last update on this blog, asking if Hong Kong property prices will start to rise again.
Currently, by applying a mathematical calculation of cost of rent vs cost to borrow, Hong Kong property is relatively fairly priced. That is, not excessively overpriced, nor excessively under priced.
In my mind, the biggest deciding factor is still:
1) How long the Fed will keep interest rates at current levels; and
2) To what extent the property cooling measures will be eased in Hong Kong. That is, will they be eased prior to the Fed increasing interest rates, in tandem with the Fed increasing interest rates, or at a lag in time from the time the Fed increasing interest rates.
If you knew the answer to these questions you could with great certainty make money (or prevent losing money) with regard to investing in property in Hong Kong.
My prediction is still that the cooling measures will be eased in Hong Kong in tandem with the Fed increasing interest rates. That is, for every basis point interest rate increase in the US, Hong Kong will ease, proportionately either stamp duties, and/or may relax the maximum borrowing ratios permitted on Hong Kong property mortgages.
What it seems, possibly, is happening, is that investors are waiting for any sign of easing measures coming prior to Fed increasing rates. The first sign that this might be the case was the announcement that Hong Kong would extend the grace period for new property buyers to obtain a refund of double stamp duty after the sale of their old flats.
It seems to me that Hong Kong investors took this as the first sign that property cooling measures will be eased in Hong Kong prior to the Fed increasing interest rates, resulting in the sharp increase in interest we have seen in new property offered for sale in Hong Kong, as well as an increase in transactions in the second hand market.
I can also report that banks in Hong Kong are reported surging mortgage applications for the month of May, up 36% from the prior month.
These are indeed early positive signs which any investor considering getting into the HK property market should carefully consider.
Entirely agree. Well this weekend should provide another interesting datapoint on if there is a property market recovery underway in Hong Kong. I think you might be right though. We have had ongoing money printing yet stagnated prices this year, so that pressure will need to be reflected in rising prices eventually me thinks.
ReplyDeleteI find it difficult to rationalize on the upward price momentum. But it seems property market are hot everywhere globally - on this basis, the lofty prices could go on for a bit longer in HK.
ReplyDeleteI am an agent and follow your blog. There are still many very rich people sitting on cash in the bank earning nothing. They are all waiting for a sign of property to pick up again. We all noticed more activity this last few weeks. Some sellers already start to put up asking prices.
ReplyDeleteLucy thanks for posting your views. Are you based on Park Island, or are you speaking about property sellers in HK generally?
ReplyDeleteThese signs or pick up are all over Hong Kong. We notice it more busy. I am not no Park Island buy my colleges there sense it is picking up just from people looking or phoning up or they increase their asking price if they are a seller.
ReplyDeleteAny thoughts on the Airplane noise recently and what are the committee members doing about it? It seems like the airplanes are flying lower, frequency of landings have increased and the landings extends way past into the night. Its almost like the old Kowloon City vs. Kai Tak.
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