Park Island, Ma Wan, Hong Kong

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 t he Fed increasing interest rates, or at a lag in time from the time t he 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...

Below is a graph showing prices and transaction volumes over the last year which a reader sent me yesterday. I am not sure what the Chinese characters say, but basically the horizontal axis is volume per month, and the vertical axis is the price per square foot. Transaction volumes still look pretty low (lets see how many they have by end of the month), but what is clear is that those who are buying are paying increasingly higher prices. This makes me wonder whether the Government's "cooling measures" have actually been both unfair and counterproductive, as they make sellers less willing to sell, yet genuine buyers are needing to fork out more. What do you think?

Property agents around Park Island are reporting strong buying demand for Park Island properties as primarily Hong Kong investors appear to see significant gains ahead for Park Island property as a result of end-user demand. Some agents are forecasting a price of $10,000 psf for regular apartments to be reached by early 2014. I think this is possible but more likely by the end of 2014 or early 2015. Below is the most recent price graph for Park Island, just out today, which seems to confirm this trend. Park Island Price Graph At the end of the graph you can see spike of 5.5% rise in prices over the last month. The themes and the factors driving the continued rises are nothing new. Park Island is great value, excellent quality, and still very affordable compared to almost all other parts of Hong Kong. Borrowing costs are very affordable (and seem poised to remain so for some time yet), and Hong Kong residents are increasingly realizing that they need to preserve the value ...

The Anacapri sales data below is sourced from Sun Hun Kai. I will also try to put up some details of secondary transaction records for AnaCapri Park Island once they start coming through. From speaking to agents it seems that initial quick on-sells were around 8-12% up, but that for anything that's being offered for on-sale now people are seeking around 20% above what they paid. For interested buyers of AnaCapri apartments on the secondary market, as I mentioned in a previous posting, it may be that as properties fall due for settlement some buyers might lower their prices. This is what has happened at some times in the Hong Kong property market. Having said that, rates are so low right now, the desire to do this is likely not to be as strong as it was in Hong Kong when interest rates were higher. AnaCapri Park Island Transaction Details  Block 座數, Villa 單位 Floor樓層 03/03/2012 33 C 3 HK$ 7,749,100.00 05/03/2012 32 B 6 HK$ 14,247,300.00 05/03/2012 33...

Despite the high deposit ratios imposed by the HKMA for propety loans in Hong Kong, property prices in Hong Kong appear to be starting a march towards new highs. With borrowing rates so low, rental prices ever increasing, and asset prices in Asia rising, Hong Kong residents seem to be finding property to be an attractive investment, and one which will benefit them as asset prices across the region rise. In a good article about Hong Kong property prices http://www.chinadailyapac.com/article/hkma-worries-over-renewed-property-market-asset-bubble  and an eventual asset bubble, Chinadaily published the following points: Local home prices have already advanced more than 5 percent in the last month. The Centa-City Leading Index (CCL), an index used to gauge the local home market’s price trend, rose for the fourth consecutive weeks for the first time in 52-week that pushed the CCL to a 24-week high. The 99.17 reading represented a cumulative surge of 5.07 pe...

For anyone wondering how prices are doing on Park Island, I am including the graph below, which is the most recent property price trend for Hong Kong property prices right up to today. For those of you who were hoping for a dip so you can buy, I am sorry to tell you that Park Island apartments hit a new high this month, up 2%. So much for the recent financial turmoil leading to property buying opportunities! Further, so far this year Park Island property prices have outperformed average Hong Kong property prices, Hong Kong island property prices, Kowloon property prices, and also property prices in the New Territories. Park Island Property Prices In the above graph, Park Island prices are in the blue colour, outperforming everything. The blue line below are the average prices for Hong Kong overall. The red line is for property prices in Kowloon. And the pink line is for NT property prices. So what is Park Island outperforming, and continuing to rise even in these recent...

The anxiety of the US debt crisis caused mayhem on the world's stock markets last week, and the Hang Seng in Hong Kong was no exception, dropping nearly 2000 points. The fear of an economic slowdown also apparently affected property sales in Hong Kong, with there being a number of reports of recent buyers of apartments forfeiting deposits and failing to complete purchase agreements for fear that property prices might fall. So called property "experts" in Hong Kong appear divided on whether the recent crisis will have any effect on the continued growth in property prices Hong Kong has seen over the last few years. My own view is that prices are likely to keep rising, after perhaps a month or two of short-term uncertainty. The US Fed said at its last policy meeting that it will keep its benchmark short-term interest rates at close to zero through to at least mid-2013. This ensures continued super-cheap borrowing in HK (due the the HKD peg to the USD), and it means we wil...

"What's the Hong Kong property market going to do"? That of course is the question everyone wants to know. And if we did know, we could of course all be very rich! No one can predict with 100% accuracy what the market will do. But what we can do with 100% certainty is look at historical data. The graph below shows Park Island apartment prices over the last year. Park Island Property Prices The line in blue is the average price per square foot for Park Island apartments, plotted on a weekly basis over the past year. And line in red is the 12 month moving average line. Those who argue that "the market has turned" will point to the apparent decline in prices for transactions over the last few weeks (as shown by the last dip in the blue line). On the other hand, others will argue that the rate of price increases has been steady and constant over the year (as shown by the constant rise upwards of the red line). My own view is that we are in for continued lo...