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Hong Kong property outlook - and Data Base

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(THIS looks pretty bullish for HK property investment):

 

PENT-UP CASH is a very real thing in the Hong Kong property market

 

9bcd534891bcf3444ab9db1802d181ca.jpg

 

[ OTP ]
Today's Standard has a headline, on page 7:
Number of HK millionaires hits high

One local resident in 10 is a millionaire* - a record 732,000 of them -
according to a survey by Citibank.
That's 22% higher than the 601,000 the previous year.

(Three- quarters of the new ones have Liquid assets between HK$1 - 5 million)

Even with the high deposit requirements,
That's a very large number of potential buyers, when they decide "the time is right" !

 

[ GD-- ]

Okay other parts of the report which you ignored (again I see selective bias here)

-The survey found the new wealthy no longer rely on property sales to make them rich, as 36 percent said stock investments were the key driver behind their fortune.

-Only 12 percent said property selling made the largest gain, compared with nearly one-third the previous year

-Meanwhile, 77 percent of the total millionaires own at least one property, with 64 percent mortgage free.

-more than half of millionaires expect local property prices to drop this year, compared with only about one- quarter a year ago.

with most of them homeowners and having a view of price drop, why would they invest into property??

 

[ OTP ]

"The survey found the new wealthy no longer rely on property sales to make them rich..."

I regard that as Bullish-for-Property.
Since wealth generated elsewhere can get invested in property - which tends to be a better long term "home" - especially since you can live in it, and you have to live somewhere. Where else would people want to park the bulk of their wealth for the long term.

" 77 percent of the total millionaires own at least one property, with 64 percent mortgage free..."

Again, that very high, 64 percent mortgage-free statistic, means that there is loads of unutilized borrowing capacity, despite very low HKD mortgage interest rates. Eventually, when people regard property prices as being as low as they are going to go, there will be a keen competition to buy - Just as there was after the quick correction of late 2008.

 

ccli_chart.png

These figures are backing up very well my old idea (admittedly borrowed partly from LGMV), that HK is a fantastic Engine for wealth generation, and a high percentage of that wealth is going to eventually get invested into property.

Much of that wealth may be "on pause" right now because of bearish sentiment towards HK property. But the broadly bearish attitude people have now will not last forever.

Is there anyone here who can spin these numbers as anything other than Bullish, and maybe even wildly bullish? (for the long term prospects of property investment in HK.)

Please try an make a Bearish argument from this data. I would like to see how that can be done.

 

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(By OTP on AX):

 

Index up about +1% on the Week':

Week : CCLI : CMMI :
==== . .
03/16: 118.25 117.60:
03/09: 117.18 116.29:
====

And not a peep from the Bears posting here.
That wipes out 1/3 of the 3% drop since the Nov.2013 high.
(Yeah, it was higher than that earlier in 2013.)

I am not changing my mildly bearish view, but I do think this may be showing that the HK property market is not collapsing as quickly as they were telling you it was.

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There is a huge amount of unsupported exaggeration in that article.

 

As far as the HK property market as a whole is concerned, prices are (in general - there may well be exceptions) drifting lower rather than crashing. Any "scrambling" is not showing up in the property indexes - only in anecdotal reports on a relatively small percentage of the market which is all the media seems to be capable of reporting. The latest CCI/CCL data is here: http://hk.centadata.com/cci/cci_e.htm Most of the selling pressure appears to be in NT West.

 

Local demand, low gearing levels, low interest rates, developer discounts and high transaction costs are all positives for the market right now. Some pressure on some PRC owners and increasing supply are the two main negatives. I would say that the market is leaning towards the downside but the difference is not that great.

 

As much as I would like to see some panic selling and an opportunity to pick up a bargain, right now, that's not happening.

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An Un-Ghosted "Ghost Town"?

(headline added by Dr.B )

 

And with perfect timing at least one journalist actually went to the trouble of checking the facts and found that claims of Valais being a "ghost city" were simply false. 75% occupancy on weekdays and higher on weekends may not be high but it is not a ghost city either:

 

http://paper.thestandard.com.hk/?archive=1

 

(It's on the bottom right of page 6 of the HK Standard 25/3/2014 edition in case the correct page does not show in the link.)

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Still TALK-Talk, but not much FALL-fall

 

(the Talk):

Owners look for quick exit (scoff! scoff! or do they? - drB.)

Homeowners are looking to offload flats through price cuts and even taking losses - of more than HK$2.5 million in one case - after the US Federal Reserve signaled interest rates may rise by the middle of next year. Rate hikes will put further pressure on the local property market.

 

"Sellers are likely to expand their price cuts to more than 10-15 percent in the near future following the possible interest rate hikes, along with other discouraging factors including developers' aggressive pricing and property curbs," said Louis Chan Wing-kit, chief executive of the residential division at Centaline Property Agency.

 

 

(the Index):

http://hk.centadata.com/cci/cci_e.htm

 

Louie, I know it makes your agents' jobs easier with bearish talk like that.

But let's do a "reality check", shall we ?

 

Centaline : 118.42 + 0.14% (week ended 2014/03/23):

 

AB_zpsd29f5c09.png

 

Maybe when they see the sideways movement, would-be-sellers will say:

 

"Forget that Talk, Mr. Agent, I won't sell !

It's not my job to make money for the g--d--m-d property agents!"

 

Personally, I am quite happy to stay in my property - I need to live somewhere after all !

If I sold, and put the money in the bank, I would have to rent, while earning a pittance on the cash.

And others I know (who are investors) are quite happy to bank a nice 4% return.

(There's no sign of falling rents where we are. And in a sideways market like we are actually

seeing, the income exceeds the loss - in areas outside the Luxury sector, where rents are falling.)

 

Let some more agents go, Mr Chan, if you want to play this game.

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We've been listening to claims that the HK property market is heading for a 10% decline, 20% decline, 30% decline, 40% decline, imminent collapse for years. There was no shortage of people predicting a total collapse of the HK property market right at the bottom in 2003. The people making these claims include large banks, property agents, reporters and a few fringe sites whose "analysis" is long on exaggeration, selectivity and unsupported claims and desperately short on either critical thinking or objectivity. They have done so with sufficient regularity and shrillness that they have long since lost whatever shred of credibility they may have had. Possibly they trained at the Harry Dent or Robert Pretcher schools of financial forecasting - I can't think of any other reason for such consistently awful advice being given with such great frequency. As Max Gunther put it - they may not be right often (or at all) but they sure are often.

 

Even a stopped watch is more useful than some of these people - at least you know the stopped watch is useless.

 

While I am sure that one day there will be another substantial decline (one cannot argue with history and economic cycles), anticipating it by listening to the likes of Mr Chan is not going to be remotely useful.

 

For my part, I am very glad to ignore them.

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"I am very glad to ignore them..."

 

I agree.

Unfortunately, there seem to be some media outlets and websites that are so eager to see lower prices,

that all they seem to be able to do is try to talk the market lower.

 

I think I could make a decent Bearish argument, but I do not hear it on those sites, nor do I see it in this chart:

 

AB_zpsd29f5c09.png

 

In my chart world, I would expect a chart like this to make (at least) one new high, as in 1997.

I am not promising that, but I think it is a reasonable expectation

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Hong Kong's "To/ParkAve." RATIOS

==

Location : 3/23/14: R-PAv. : End.'13 : Ratio--- / End.'12 : Ratio--- / End.'11 : Ratio--- /

======

Index---- : 118.42 : ====== : 119.07 : ====== / 115.78 : ====== / $96.68 : ====== /



ParkAve. : 11,478 : 100.0% : 12,325 : 100.0% / 11,161 : 100.0% / 10,147 : 100.0% /

TaikooSh: 11,681 : 101.8% : 10,936 : 88.73% / 11,665 : 104.5% / $9,877 : 97.34% /

Robin Pl. : 13,721 : 119.5% : 14,407 : 116.9% / 14,985 : 134.3% / 14,091 : 138.9% /

ZenithW. : 13,052 : 113.7% : 12,715 : 103.2% / 14,002 : 125.5% / 11,798 : 116.3% /

Sorrento : 15,779 : 137.5% : 17,849 : 144.8% / 16,316 : 146.2% / 13,258 : 130.7% /

Pk.Island : $6,303 : 54.91% : $6,529 : 52.97% / $6,585 : 59.00% / $5,645 : 55.63% /

CarCoast : $5,484 : 47.78% : $5,768 : 46.80% / $6,053 : 54.23% / $4,610 : 45.43% /

Kingswod : $4,586 : 39.95% : $4,502 : 36.53% / $4,282 : 38.37% / $4,035 : 39.77% /


======


ParkAve. : 11,478 : 100.0% :



PkAvenue_zpsccb5c47a.png



TaikooSh: 11,681 : 101.8% :

Robin Pl. : 13,721 : 119.5% :

ZenithW. : 13,052 : 113.7% :

Sorrento : 15,779 : 137.5% :

Pk.Island : $6,303 : 54.91% :

PkIsland_zpse8a37cc7.png


CarCoast : $5,484 : 47.78% ::


=======




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Cheung Kong's Trinity Towers (in Cheung Sha Wan) - has sold very well

 

The first batch of 216 flats sold out quickly thanks to "a low pricing strategy"

 

+ Supposedly at 10% below other developments in the district

 

+ 80% of the buyers were end-users

 

+ There were 5,200 registrations received prior to the sale

 

+ PRICES for 1-BR and 3-BR flats (362 - 745 sf. net) were "as little as HK$8,400" per sf,

That's HK $3.26 million, with the discounts of up to 11.75 percent

 

+ The next round of 93 flats, will be sold at an average of HK$10,323 psf (after discount),

or HK $4.03 million - HK $8.5 million

 

Here are two of the Four Little Dragons - a nearby project
xx
Property----- : Price psf, Gr. /
=====
Banyan Gdn.: HK$8,446.36 /
Liberte ------ : HK$8,477.44 /
=====
At $10,323 psf, Net - this could be a little cheaper.
But how good is the location?
It will be interesting to see how these sales impact prices at Four Little Dragons
If someone else can comment on the location, that would be good.
I went by it yesterday in a bus, and my quick reflection was :
This Location is LESS Good than 4-LD's.
Comments?

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TICKET TO RIDE (Ferries) / and Housing Society Rents - now that much dearer

 

Once "cheap" locations now more expensive to reach - Like Lantau, Lamma, Cheung Chau... etc

 

No. Point to Hung Hom: up, from HK $5.50 to $6.50

 

Central to Mui Wo: up by 70 cents, and $1.10, depending on the day of week

+ Monthly passes up from HK $507.80 to $532.00 : + 4.76%

 

Meantime, the rents of 20 estates under the Housing Society, went up by 8 percent

 

> HK Standard, pg. 7

 

the point is cost of living in "cheaper" accommodation are rising fast.

 

Meantime:

 

1 / The Standard is talking about a "Baby step in Home Policy easing",

 

As: CYL has seemed to back away from the "HK Property for HK people" policy,

as it has become evident that many property prices have eased

 

2 / Nan Fung's CEO is interviewed in the SCMP,

Talking about the challenge of rising build costs, which are up from HK$1,000 to HK$3,000 psf

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Has the HK property market stabilized:

 

http://www.businessweek.com/videos/2014-04-01/has-hong-kong-s-property-market-stabilized

 

(In Edit: I just watched it)

 

The chinese guy (xx) says:

"Prices are stable, but when there is a sale it is 10-15% lower,"

 

Where in heavens name does he live - Mid-levels?

He should get out more!

The HK market is not frigging Mid-levels, for goodness sakes.

 

And in the lower price market, below $4-5 Million, it is truly stable, with possibly as many sales

ABOVE 1-2 years ago, as below. At least that is what I am seeing where I live.

 

Why do they put bananas like Mr.X on Bloomberg? To make CYL feel good?

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Hong Kong's "To-CL INDEX" RATIOS

==



Location : 3/23/14: R-PAv : End.'13: Ratio-- / End.'12: Ratio-- / End.'11: Ratio-- / Aver.

======

Index---- : 118.42 :====== : 119.07 :====== / 115.78 :====== / $96.68 :====== / '11-13

ParkAve. : 11,478 : 97.93x : 12,325 : 103.5x / 11,161 : 96.40x / 10,147 : 105.0x / 101.7x

TaikooSh : 11,681 : 98.64x : 10,936 : 91.85x / 11,665 : 100.8x / $9,877 : 102.2x / 98.28x

Robin Pl. : 13,721 : 115.9x : 14,407 : 121.0x / 14,985 : 129.4x / 14,091 : 145.7x / 132.0x

ZenithW. : 13,052 : 110.2x : 12,715 : 106.8x / 14,002 : 120.9x / 11,798 : 122.0x / 116.7x

Sorrento : 15,779 : 133.2x : 17,849 : 149.9x / 16,316 : 140.9x / 13,258 : 137.1x / 142.6x

Pk.Island : $6,303 : 53.22x : $6,529 : 54.83x / $6,585 : 56.88x / $5,645 : 58.39x / 56.70x

CarCoast : $5,484 : 46.31x : $5,768 : 48.44x / $6,053 : 52.28x / $4,610 : 47.68x / 49.47x

Kingswod.: $4,586 : 38.71x : $4,502 : 37.81x / $4,282 : 36.98x / $4,035 : 41.74x / 38.84x


======


Park Avenue and Taikoo Shing seem to hover at "around 100x" times the Index




ParkAve. : 11,478 : 97.93x :



PkAvenue_zpsccb5c47a.png



TaikooSh: 11,681 : 101.8% :

Robin Pl. : 13,721 : 119.5% :

ZenithW. : 13,052 : 113.7% :

Sorrento : 15,779 : 137.5% :

Pk.Island : $6,303 : 53.22x :

PkIsland_zpse8a37cc7.png


CarCoast : $5,484 : 47.78% ::


=======




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Some HK Properties INSIDERS are Bullish

 

1 /

Their salaries are rising fast.

Today's Standard says that Property Professionals (surveyors and architects) in HK,

enjoyed a salary rise of 9.2 percent, based on 1,525 interviews between Nov.2013, and January.

Salary growth lagged Malaysia (11%), but was in line with Singapore (9%), and ahead of China (7%.)

 

But the average salary in HK (HK$771,646) lagged behind China (HK$1.08 million0,

and Singapore (HK$979,500.)

 

HK-1200 / Midland Holdings ... Weekly-5yrs : Wk-10yrs :

HK1200_zpsb88bf426.png

 

2 /

Midland Holdings Chairman boosting stake.

Freddie Wong Kin-yip bought 1.49 million shares at HK$4.24, boosting his stake,

from 17.8 percent to 18.01 percent

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Is the Press trying to talk the market down? Why is that?

 

Here's are some comments from today's Standard:

"

Most flats were sold with 3-7 percent price cuts.

A 451-square-foot flat at City One changed hands for HK$4.7 million after a HK$305,000 price cut.

Another flat at Tai Koo Shing was sold after a HK$400,000 price cut, with area prices at HK$12,337 per sq ft.

More primary projects are expected to be offered this month.

Cheung Kong Holdings' (0001) Trinity Towers at Cheung Sha Wan launches its last batch of 93 units priced

between HK$9,106 and HK$15,316, up 1 percent from the previous batches..."

> http://www.thestandard.com.hk/news_detail.asp?pp_cat=30&art_id=144276&sid=41993332&con_type=1

==

In an illiquid market with few transactions, I would expect Sellers to Cut asking prices to get sales done.

Buyers are also raising bids to get transactions done - but we are never told :

"The buyer raised his bid by $200,000, and the Seller lowered their offer by $200,000,

to get a transaction done."

In fact, this is a normal pattern in negotiations, with both sides moving.

The press is reporting this in a way designed to leave the impression that prices are falling.

If they are, it is a very gentle process, as the Centaline indices reveal.

What the article does NOT report, is that:

"Tai Koo Shing ... area prices at HK$12,337 per sq ft"

... is simply NOT accurate.
The last price reported for TKS in Centaline was HK$11,392 - on 3/30/2014
And so if that was Transaction price, it was 8.3% over market, as per the Centaline Index.

That's a very different picture than The Standard is painting...

WHY?

Why are they trying to manipulate the market ??

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Ed, on AX, seems to be endorsing "spin" in the press.

 

It is really beginning to p/ss me off.

And I may not be posting there much longer

===================================

 

Posted by OffThePeak (2 hrs ago)

"HK Developers Cutting Prices"
Ed,
that's a pretty misleading title - to a misleading article.
Here's a comment on it that I had posted elsewhere:

== QUOTE ==
Is the Press trying to talk the market down? Why is that?

Here's are some comments from today's Standard:
"
Most flats were sold with 3-7 percent price cuts.

A 451-square-foot flat at City One changed hands for HK$4.7 million after a HK$305,000 price cut.
Another flat at Tai Koo Shing was sold after a HK$400,000 price cut, with area prices at HK$12,337 per sq ft.

More primary projects are expected to be offered this month.
Cheung Kong Holdings' (0001) Trinity Towers at Cheung Sha Wan launches its last batch of 93 units priced
between HK$9,106 and HK$15,316, up 1 percent from the previous batches..."

> http://www.thestanda...3332&con_type=1
==

In an illiquid market with few transactions, I would expect Sellers to Cut asking prices to get sales done.
Buyers are also raising bids to get transactions done - but we are never told :
"The buyer raised his bid by $200,000, and the Seller lowered their offer by $200,000,
to get a transaction done."
In fact, this is a normal pattern in negotiations, with both sides moving.

The press is reporting this in a way designed to leave the impression that prices are falling.
If they are, it is a very gentle process, as the Centaline indices reveal.

What the article does NOT report, is that:
"Tai Koo Shing ... area prices at HK$12,337 per sq ft"
... is simply NOT accurate.

The last price reported for TKS in Centaline was HK$11,392 - on 3/30/2014

And so if that $12,337 was Transaction price, it was 8.3% ABOVE market, as per the Centaline Index.


That's a very different picture than The Standard is painting...
WHY do they "spin" transactions in a negative way?
Why are they trying to manipulate the market ??
====================================

 

Posted by Ed (2 hrs ago)

 

I don't see any need to manipulate the market - at the end of the day it was suggested many months ago on this forum that punitive taxes which chased the PRC buyers out of the market -- the big supply in the pipeline --- and now the credit crunch in China --- would put downward pressure on prices.

And that appears to be what is happening - and that appears to be what is being reported...

Keep in mind the media including the SCMP (whose property arm - Kerry Props) is heavily involved in the market

And the cartels in HK are heavily weighted in property (Swire, Cheung Kong) and would not be very happy to see the media attempting to punish their assets (remember these guys have retail holdings and they might pull ads from media that they thought were conspiring against them)

So my question is - why would they try to talk it down? What does the Standard, SCMP and other media gain?
====================================

 

Posted by Maar (52 mins ago)

 

" So my question is - why would they try to talk it down? What does the Standard, SCMP and other media gain?"

They gain transactions. If the prices are high and non-changing, nobody buys and sells. If the prices are dropping, people buy and people sell. If there are trades, more people will buy new properties as well (a sale for 5% cheaper is better than no sale at all). Banks also benefit from trades, as does the government.

Everybody benefits, and for all of them, a sale 5% cheaper is better than no sale at all.

====================================

 

Posted by Ed (42 mins ago)

 

I don't think the media need to talk the market down - it is already falling.

Surely government measures are what impact the market far more than media sentiment.

I cannot see how this market does not drop when 40%+ of the previous buyers of new properties (i.e. PRC buyers) have exited the market due to punitive taxes - and record numbers of new apartments are under construction

I could see them talking it up - surely Kerry Properties would want the SCMP to talk the market up at all times (unless it was actually dropping and they had no choice if they wanted to maintain crediblity) - the last thing Kerry wants is a crashing market.

How is Kerry any different than the people on this forum complaining that the media is talking the market down?

They don't want that to happen either --- one difference - they own the media....


This sounds like people long property looking for someone to blame for falling prices....

====================================

Posted by OffThePeak (11 mins ago)

 

"They gain transactions. If the prices are high and non-changing, nobody buys and sells. If the prices are dropping, people buy and people sell." - Maar

Well.
I don't think the reason that transactions have dried up in the secondary market is because of the high prices. It is because of the much higher transaction costs: 15% BSD, 2X DSD, etc.
For instance, if someone wants to sell and buy a bigger place, they are stuck with a much higher "switching" cost than they had before.

Of course, you may argue that the govt will cut these taxes when prices fall another 10-20%, and I suppose that is true. Maybe that's what many Buyers and Sellers, and even the media want to see: a further drop, so that the govt can scrap the very high transaction taxes.

Meantime, the only reasonably "healthy" part of the market, is the new property part, where developers have cut prices somewhat, and they are being very clever about how they announce their discounts.

The bank and media are playing along with this:

+ Banks - By lending against (higher) actual sales prices of new property, while refusing to lend against actual sales prices in the secondary market, and putting their bank valuations well BELOW last done, in many cases.

+ Media - By talking down the secondary market while exaggerating the size of discounts on new properties. This way, buyers of new properties think they are getting a bargain, and they don't bother to run the numbers carefully enough to find the facts

====================================

Posted by OffThePeak (3 mins ago)

 

"This sounds like people long property looking for someone to blame for falling prices...."

Bullfeathers, Ed.

I am using facts to back up my arguments, and pointing out the spin and misinformation in the press. You seem to want to endorse the spin.

Do you want readers on AX to be misinformed?

====================================

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Ed is being very short-sighted imho.

 

OTP has been the most active poster on the AX property threads for some time.

If "he" stops posting on AX... and instead only posts here,

I wonder how many of the AX readers might start coming here,

to see less spin-ridden comments on the HK property market?

 

Why should people who want a balanced take on the HK property markets want to read

comments only from Bears, who have the main purpose of talking the market down?

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(I am giving Ed a chance to decide whether or not he was to be an advocate of

what has been called an "intelligent" chatboard or not):

 

Posted by Ed (11 mins ago)

 

I am sure the Standard and SCMP journalists would also say they are backing up their stories with facts....

And no doubt they would say your facts are incorrect or cherry picked....


So I continue to post the articles --- and let our audience make up their own minds.

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Posted by OffThePeak (6 mins ago)

 

Kindly READ THE DETAILS that I reported above.
And Why not comment on the specific reporting that I have found irritating. (?)
The pattern showing bearish spin in The Standard and )even in the SCMP) has been pretty clear in recent months IMO.
Some have said those two new organs have tended to "talk up" the market when it is rising (ie the press tends to Talk UP prices in a Bull Market, and Talk DOWN prices in a Bear Market, reinforcing whatever trend may be underway.) I think the idea of the Press reinforcing whatever trend may be underway, is pretty interesting.
So Let's DISCUSS SPIN HERE TOO
I do think that it is important for intelligent readers on an intelligent chatboard to stay aware of the spin of the media (whatever side it might come on), and make that "spin" a subject of commentary - along with the State of the market itself

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Posted my comments on your diary thread.

 

FWIW, I am inherently suspicious of claims of cross-the-board upward or downward bias in the media. For the most part, they are trying to write stories that grab people's attention and that usually means talking about the extremes.

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Sure.

But I have seen most of the "spin" has staked up on the Bearish side in recent months.

 

Though I acknowledge it may be the reverse, with media spin most commonly on the "Bullish" side in a rising market.

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SPIN THIS ? ! : The Data is a clear challenge to the Bears:

 

"the 2,680-square-foot flat on the 36th floor of Block 1 at Dynasty Court changed hands for HK$73.88 million yesterday... Kato Koki paid HK$78 million for the flat at the 17-23 Old Peak Road development in November 2011, Land Registry data shows...."

Thanks, L. for pointing that out.

Now tell me, why are you ignoring 10X - 100X or more people who bought flats BELOW $4 MILLION purchase price, and are now Ahead on their purchases?

Is this "rock star guy" somehow more meaningful than the hundreds or thousands of ordinary folk who are happy with their property purchases?

Perhaps you should apply for a reporters job at SCMP or The Standard. They may like your assistance in finding stories that may help push the market lower.

Maybe you can tell them how they can get a negative spin into this - Yesterday's Centaline data:

Centa-City Leading Index : 118.82 + 1.36%
> http://hk.centadata.com/cci/cci_e.htm

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(as was posted on AX):

 

"Centadata back above 119"

Yeah.
If you look at prices across HK they have now changed very little since the end of 2012:

Week : CCLI : CMMI : RobinPl: Tregun: Dynast / IslHarb: ParkAv: Waterf : Sorrent : TArch : C'ribC : TaikSh.
==== . .
04/13: 119.04 117.94: 13,754 : 19,250 : 23,960 /10,291: 11,260 : 13,109 : 17,021 : 22,843 : 5,627 : 12,587
2013 :
12/29: 119.07 118.19: 14,407 : 19,180 : 23,181 /10,783: 12,325 : 13,926 : 17,849 : 21,820 : 5,768 : 10,936
2012 :
12/30: 115.78 114.25: 14,985 : 19,609 : 23,883 /10,432 : 11,161 : 12,740 : 16,316 : 22,189 : 6,053 : 11,665
===

This is despite:
+ Reports of 10-20% "discounts" at new property launches - (I would ask again: how really are these?)

+ Banks cutting their Valuations by 10% or more in many cases
+ The barrage of reports in the news media about 10-15% cuts in "asking" prices that you can find almost every week
+ Agents trying hard to talk prices down, so they can have an easier job making a sale, in what is admittedly a "buyers market"

But the big price drops that have been talked about, even shouted about by some Bearish posters here, have not yet found their way into the Indices.

(And I admit to still being sore about being called someone "talking his book", when I have been consistently posting realistic and mostly accurate reports. Where are the Price cuts we have been promised, Bears??)

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SWALLOWED WHOLE - on AX

 

Posted by E--

 

SCMP this morning: Hong Kong home sales surge over Easter as owners cut prices

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OTP :

Yeah.
We have seen headlines like that for months, as the market moved sideways.

Maybe:
"Sellers cut offers, and Buyers raised bids, to meet somewhere in the middle"-
makes a borrowing headline. So instead, we get the usual bearish spin.

As evidence for "price cuts", they talk about a flat at Taikoo Shing which "changed hands for HK$8.75 million, below the asking price of HK$8.9 million"

Run the numbers.
That's a 702-sf flat, and so the price was $12,464 per sf.

Latest Centaline Index for Taikoo Shing, an old estate on the far end of HK Island, far from Central was $12,587 last week and the average for the year 2014 , it was under $12,000 psf.

So the buyer is hardly getting a bargain. There's no real sign of the "5 to 6 per cent discounts" the article talks about. Cutting by 1.7% from $8.9 to $8.75 is a pretty normal step in buyer/seller negotiations these days.

The Headline could have been just as fairly written with the reverse spin, by stating:
"Easter buying surge shows prices above market" (ie ABOVE the average for this year.)

The bearish spin, and people's willingness to swallow it whole is noteworthy IMO. The agents talk the market down (to make their jobs easier in what is admittedly still a "buyers market"). And the press reports the spin with a straight face, not bothering to check any figures.

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A cryptic headline from The Standard

 

"Easter flat sales rebound as fewer units on the market"

 

> http://www.thestandard.com.hk/news_detail.asp?pp_cat=1&art_id=144686&sid=42101450&con_type=1

 

?Huh? How does THAT work?

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LOWER PRICES - Who gains ?

 

Jeremy01 (1 hr ago) wrote on the previous thread:

 

"The press is helping to push the prices down.

They also want more transactions, because everybody benefits from more transactions: the agents, the banks, the government, etc."

 

???

"Everyone" gains?

Not quiet true. The sellers, taking less for their flats do not benefit.

Will the agents agree to take lower commissions, the banks to take a lower interest spread, and the government to take less tax - To make this lower price magic happen? I think not.

 

I find it funny that people seem to think: Ah, well, the sellers should just take less, so all these others with vested interests can benefit.

 

Don't forget: The market has slowed because of New Taxes being imposed, to "slow" the market. That slowing, has already damaged the opportunities for sellers, and now you want them to take a bigger haircut too? This seems unfair.

 

I would like to have the government say something about when the tax will be removed. If they said something like: We will cut the BSD from 15% to 10% when the Centaline Index falls 10% from its high, And Raise it by 5% if the market climbs 10% above its old high" - then that might clarify things.

 

Clarity on the taxes might help the market transactions to pick up.

 

As it is, many people who were not Permanent Residents when the BSD was imposed may be getting their HKIDs in the future. And children of HK people may reach adulthood. These two things may help to revive demand over time, especially in the lower priced sector, where DSD is less of a problem.

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