Jump to content
Sign in to follow this  
drbubb

Hong Kong's Property Cycle / charts, comments

Recommended Posts

The HK government will continue to keep a tight land supply. Donald Tsang said they won't lower the minimum bid for land auctions to be triggered. Keeping land supply tight will help stabilize/prop up property prices. Only one small site in Pak Sha Wan, Sai Kung, went to auction this year. I suspect next year will be similar.

 

Area 55b that is in front of CC which comes available in March will most likely not be triggered by any developer. I suspect that once the row houses in front are complete that will be it for TC for sometime.

 

In the future there is the potential for tight supply in TC which could help drive up prices in tandem with the recovery we've been talking about.

Share this post


Link to post
Share on other sites
UPDATED

Here's Centaline's Weekly Mass Market Index (MMI) + 10/06/2008

aa0ht7.gif

.......... Jan'08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Dec

Compare

004ix5.png

 

I continue to think a break in Libor/ Hibor is needed to begin to restore confidence.

Will a drop in Libor back to under 3% be enough? Not without some help from the Stock market, I reckon

Looking at the LIBOR chart, how do we interpret the LIBOR rate? The numbers are in the 90's and LIBOR is around 4% isn't it? Is the LIBOR interest rate related to the number - 100? (i.e. 96-100 = 4%).

 

Some clarification please.

Share this post


Link to post
Share on other sites
The HK government will continue to keep a tight land supply. Donald Tsang said they won't lower the minimum bid for land auctions to be triggered. Keeping land supply tight will help stabilize/prop up property prices. Only one small site in Pak Sha Wan, Sai Kung, went to auction this year. I suspect next year will be similar.

 

They tried that during the Asian economic crisis and it had no effect on property prices. Ironically, the year previous the government was gung ho to build 80,000 units per year to alleviate a perceived housing shortage. Anyway, prices then proceed to fall about 65% so I'd call it an abject policy failure.

 

Theoretically, people expected this type of strategy to work but in fact the laws of supply & demand are irrelevant during times of severe economic upheaval as you really need lots of credit to support property markets. So it doesn't matter how much theoretical 'demand' there is if no one can or will borrow. I do think however that the restriction of supply in the early part of this decade probably fueled the massive run-up of late last year when supply ultimately fell short of demand.

 

The reality is that land policy implemented today won't affect the market for 5-10 years. It takes a long time to source land, plan & construct large projects. It may make the right noises politically but in reality it's stupid to restrict supply right now as it does nothing to address todays problems.

 

 

Share this post


Link to post
Share on other sites
Is the LIBOR interest rate related to the number - 100? (i.e. 96-100 = 4%).

 

Yes, that is exactly right.

Presented that way, the Libor contract tends to move in the same direction as Bond prices,

and property prices too- but there is not a perfect match. Rentals matter too. So does supply/demand

 

The reality is that land policy implemented today won't affect the market for 5-10 years. It takes a long time to source land, plan & construct large projects. It may make the right noises politically but in reality it's stupid to restrict supply right now as it does nothing to address todays problems.

 

It is good news, I think, that there is not a huge supply of new property in the pipeline.

After 1997, new properties average 20,000 - 25,000 new units for years and years.

Now its more like half that.

 

There is some growth in population, and actions like combining older units still happen.

So when growth comes back to HK you might see reasonable tightness

Share this post


Link to post
Share on other sites

Policies / laws were changed. I remember it was 2004 August 14th that the law was changed for landlord tenants. Essentially it comes down to being able to kick out the tenant if he/she does not pay the rent. This essentially changed how investors saw properties as a rental investment.

 

The price and supply of subsidized housing was cut and sales were stopped for a long time. It was a few months ago when the government started selling subsidized housing again. But prices for these varied and were not cheap.

Share this post


Link to post
Share on other sites

GOOD NEWS - a rather huge drop in Hibor

 

HKAB Hong Kong Dollar Hibor

 

Value: 3.66 Change -0.531

% Change -12.677

 

/see: http://www.bloomberg.com/apps/quote?ticker=HIHD03M%3AIND

 

(added Tuesday):

10/20/2008

Period Rate(%)

1 Day 1.00

1 Week 0.95

1 Month 3.07

2 Months N/A

3 Months 3.55

6 Months 3.43

 

Value: 3.35 Change -0.309 % Change -8.449

 

Share this post


Link to post
Share on other sites

POSITIVE POINTS - from the main HK property thread

 

"I suppose I should close this with a few positive points:

 

+ The number of new properties coming to market is small by historic standards

+ HK people are not overborrowed (average LTV is about 30%), and banks have not lent wildly

+ HK people have big savings, and can continue to buy and upgrade their living, if tehy have confidence

+ A big drop in orders from the US and Europe is bound to hit Chinese factories owned by HK people hard,

But the survivors will be stronger, and HK people are resilient

+ China looks like it is getting set to lower rates to help its slowing economy, and that should help HK too"

 

== == ==

 

(I also wanted to record here some conjecture about HK's future.

First this, from Martin Armstrong):

 

"It is indisputable that societies collapse either completely, such as Babylon, Greece, Rome and

the Khmer Empire while others are economic collapses that result in the demise of a nation

geopolitically yet the population does not move in bulk and continues in a more poverished state.

This later example is indicative of the Spanish defaults that contributed to the demise of the

Venetian Empire in the 1500s wiping out the bankers of Venice. The mismanagement of the

Spanish Empire was crowned perhaps by the bad luck that also led to the defeat of the Spanish

Armada in 1588. However, it was the heavy spending of the Spanish Crown that led Philip II to

risk everything in the attack on England. A victory against the English was viewed as a desperate

measure to pay off the debts and restore the economic power of Spain. The demise of the Spanish

Armada in 1588 destroyed Spain as a world power, reversed the fortunes of the Venetian bankers,

and contributed to the shifting of the banking center to Germany, followed by Holland, and then

London."

 

Catches the flavour of it. Echoes of the US in Iraq perhaps?

A thoughtful reading, is needed.

 

What next, a shift of the "banking crown" to Hk or Shanghai?

 

The LONG WAIT after the "Long Emergency"?

"It does not appear that 1999 will become noticeable

as a major turning point until at least one 8.615 year

interval takes place. Thus by late 2007, dissatisfaction will become self-evident. Of course,

between 2012 and 2020, the real problems will unfold regarding social security, healthcare, and a

host of government benefits. Funding such programs will lead to major economic short-falls.

Cyclically, if the United States were to survive in the form as we know it today (a big if),

recovery is not likely before 2103 to 2111 with the extreme projections into 2223."

 

I suppose the world does need a "global financial centre", and the troubles in the US,

and coming troubles in the UK, will give Hong Kong (& Shanghai too) a real chance to take

the global crown.

 

A key to this will be some more vibrant futures markets here, including those for commodities

like Gold and Oil. If China can be persuaded to put its capital into the HK stock and futures

markets, then HK will have a great chance to grow into this role.

Share this post


Link to post
Share on other sites

Another look at (US) Libor vs. HK Property

emmxj5.gif

 

Centaline's HK Property Index - it did not respond to lower Libor in 2002-3

ccli_chart.png

 

Caribbean Coast lagged the uplift somewhat

estateinfoeek4.png

... and it didnt manage to exceed that 2005 high (too much new supply?)

 

Into the boom - HSI as a leader

HangSeng.jpg

... But a 50%+ drop from the Oct.2007 peak - ugh!

Share this post


Link to post
Share on other sites

I note that:

 

32,000 x .382 = 12,224 : is that the next target for HSI?

 

Added in edit on Monday, the following charts:

aachart3im1.gif

 

Big drop in China today

Value: 1,719.23

Change: -62.368 / % Change: -3.501

 

83327884io1.png

 

83280578vn8.png

 

Most oversold since?

bigiv3.gif

another view

big2zt1.gif

Share this post


Link to post
Share on other sites

My China property Bellwether, China Overseas Land (HK:688) is looking good ... update

 

bigyy2.gif

 

== ==

(from today's SCMP):

 

TO BUY OR NOY? The Lure of Mainland Property stocks

======

 

Does the beasten down China real estate sector entice the experts?

 

After a 90-95% drop in the sector, Peggy Sito talks to a panel of experts

 

(1) Jing Ulrich, JP Morgan China equities

+ Little structural reason for an extended downturn

+ Mass market should recover when sentiment turns positive

+ Central govt. initiatives should support the market

+ "We favour large developers with strong CF & balance sheets

 

(2) Eric Wong Chun-yu, UBS: head of RE research

+ Time to consider buying, given central govt. moves

+ Wide swings likely, so buy a basket rather than one stock

+ Listed co's can dispose of assets more easily (than private) thru offshore

+ Entering now may get lowest prices, but later could be safer

 

(3) Kenny Tang Shing-hing, Tung Tai Securities

+ This is the right time to buy- stock market moves ahead of physical property

+ Improvement in physical market is likely, given govt. actions

+ Builders' stock prices already reflect a 2009 dive in earnings

+ Suggests: China Overseas Land, and China Resources Land

 

(4) Castor Pang, Sun Hung Kai Financial's strategist

+ Expects a rebound in the next 1-2 months, thnx, to easing pressure

+ Builders are very cheap at current levels, but be selective

+ Avoid Shanghai real estate mkt., which is glutted with supply

+ Guangdong and Beijing may be better; recommends same as above

 

(5) Eric Yuen Chi-fung, Dao Heng Securities

+ Govt. making efforts, but no sign of pick-up yet

+ Developers may see continuing CF problems

+ Further rate cuts may be required to get market moving again

+ Mainland developers may see a short term rally

 

(6) Alex Wong Kwok-ying, Ample Financial Group

+ It is not the right time to buy into mainland developers

+ Recent rally may be very short-lived

+ Mainland has lower quality co's than in HK (low leverage, strong CF)

+ Thousands of develops on mainland may be forced to sell

+ Smaller players need to be forced out before there is a low

 

(7) Li Kwok-suen, Philip Capital Mgmt

+ Not time to buy, but IS time to do some homework

+ Keep on eye on quality co's with low gearing and strong finances

+ Stock market could be instable: if 10,500 goes: next stop is 8,500

+ The Bottom in Heng Seng could be 6,400 :

: "It makes more sense to buy property stocks then" (at HSI-6,400)

 

/see: http://www.advfn.com/cmn/fbb/thread.php3?id=12259451

Share this post


Link to post
Share on other sites

HK Property Stocks / Ready to break above the Downtrend?

 

aa0sa4.gif

 

/see: http://www.aastocks.com/eng/stockquote/gif...?index_code=HSP

Share this post


Link to post
Share on other sites

A question for you guys. I hear that a Hong Kong-Zhuhai-Macau Bridge is planned - how do you think that this will help HK / Macau? - if they manage to finance/build it

Share this post


Link to post
Share on other sites
A question for you guys. I hear that a Hong Kong-Zhuhai-Macau Bridge is planned - how do you think that this will help HK / Macau? - if they manage to finance/build it

 

Certainly the jobs created in building it will help, and maybe especially places like Tung Chung,

if thgey put some construction offices and personnel there.

 

Afterwards, if trade picks up, it should help. And it certainly helps to integrate HK within China

 

Today's market may not like the HSBC mortgage rate rise, released after the market clsoe, I think

Share this post


Link to post
Share on other sites
Certainly the jobs created in building it will help, and maybe especially places like Tung Chung,

if thgey put some construction offices and personnel there.

 

Afterwards, if trade picks up, it should help. And it certainly helps to integrate HK within China

 

Today's market may not like the HSBC mortgage rate rise, released after the market clsoe, I think

 

Thanks B

 

Share this post


Link to post
Share on other sites

HK Population passes 7mn in surge in Births

 

Hong Kong's population finally passed 7 million last year, helped by a surge in births to a 25-year high.

 

Net migration of 18,700 was the other factor in the 0.8 percent increase in the number of Hongkongers to 7,008,900.

 

A total of 78,674 babies (+11%) were born in the city last year, but only 45,109 were born to native HK parents.

Another 7,228 have mainland moithers and HK fathers. 28,337 were born to non-Hk parents. (will they stay?)

 

That's the largest number of births since 83,300 in 1983.

 

Also: 41,600 settled in HK from Mainland, while 41,300 died

 

HK's Population

==========

1961 : 3.19 mn

1971 : 4.10 mn

1979 : 5.02 mn

1994 : 6.12 mn

2008 : 7.01 mn

"optimal size" is 10 mn - said Donald Tsang in 2007 (FT interview)

Share this post


Link to post
Share on other sites

Let's see if this formation marks an important TURN

 

Double Island Bottom - finished on 2/23/2009

001h.png

Share this post


Link to post
Share on other sites

http://www.bloomberg.com/apps/news?pid=206...id=asoZu0ThVUtc

 

Hong Kong Tenants Play ‘Hardball,’ Pushing Rents to 2-Year Low

 

“The property market has fallen off a cliff, so people are playing hardball now,” said Cabbabe, 28, a steel trader who moved to Hong Kong from Australia. “My friends renegotiating their rents are telling their landlords, we’ll just walk away if you don’t give us a discount.”

 

You ain't seen nothing yet.post-2812-1235614445_thumb.jpg

 

The Hang Seng is heading to 7000, and the property market won't be far behind.

 

The Hong Kong property market is heading for a hard fall. The _only_ thing that I could see boosting Hong Kong property prices in the next 5-7 years is a massive influx of mainland buyers. In fact, I suspect at some point, probably too late, the Hong Kong kleptocracy will be plying whatever bribes they can to get Beijing to allow mainland Chinese to buy property in Hong Kong. The problem of course is, China is dealing with its own massive property slump and the last thing it needs is to facilitate a flight of capital amongst the one group of people who could put a bottom in their market.

 

The reason I think the Hong Kong property _could_ fall below SARS levels is because the market was so spectacularly fragile in 2006-2007. That period marked the height of the asset bubble in most asset classes, and yet the property frenzy that marked the peak of the 1996-97 market was largely absent. In fact, as the CCI chart indicates, the market was trading sideways while interest rates were comparatively low and the economy was booming with record tourism, record port traffic and a record stock market prices. Regardless of where prices end up, I think the chart is pretty much indicating a down trend for _yeaaaaaaaaaaars_ to come.

 

The housing market is even more fragile now, while interest rates are at their lowest in decades. More importantly, the fundamentals moving forward are horrific. The Hong Kong kleptocracy insists on maintaining their peg to the US dollar, even though the average street begger in Calcutta could tell you the dollar is doomed. Inevitably the dollar will face a spectacular drop, the only remedy for which will be _higher_ interest rates. Of course, by the time the US dollar tumbles over a cliff, we will be well on our way to massive inflation, and I doubt very much we're talking about modest interest rate increases. At the same time of course, the Fed is essentially hamstrung and fears higher interest rates would murder the economy. What would force the Fed to raise rates anyhow? When the economy has been effectively murdered already. Talk about your good news!

 

I imagine the Hong Kong property market will be in a multi-year consolidation pattern with a downward bias as home owners refuse to accept reality, and as buyers bide their time. The death-knell will come once the weaker hands are forced out of their homes by sky-rocketting interest rates. I also think the fact that there are more "weaker" hands than many suspect. I remember agents dangling 5%-down deals galore when they were pimping CC. The scene was pretty much the same at other property launches. The fact of the matter is, a large component of newer property consists of speculators rather than owner/operaters, and the speculator's market stands to get creamed in the next few years.

 

Of course, with the spectre of massive hyper inflation looming, nominal prices could sky rocket, with valuations going through the roof. I imagine real prices will be in a steady decline until the route.

 

And the CHERRY on the icing on the cake? RIGHT on the back of this massive paper crisis comes the very very real energy crisis and the MORE real water crisis, both which will have a devastating impact on this region. And talk about lack of leadership... Hong Kong is doing _nothing_ in anticipation of the looming energy crisis. In fact, the impression you get in Hong Kong is that there is no energy crisis at all.

 

I'm wondering what effect rolling blackouts or brownouts will have on the property prices of 78th floor sea view units after a couple of jogs up the steps with arms full of groceries. The low rise market is starting to look better every day.

 

The Hong Kong property market has been one of the largest rigged markets in the world, with the government effectively regulating supply on the one hand, and fully subsidizing nearly 50% of the population's housing on the other. People lucky enough to weasel in to the private property market have been able to enjoy the benefits of astronomical asset inflation for decades, but we all know it was a sham. The government could have deflated this market by building more homes, and by helping more of Hong Kong's disadvantaged into owning their own homes. But they refused to do so, creating the widest income gap in Asia, and one of the highest in the world. The corollary to "Hong Kong has the most millionairs per capita" is, Hong Kong has the broadest base of urban poor among developed Asian economies. This is a staggering economic misalignment that WILL rectify itself.

 

After 40 years of RAMPANT government market manipulation, Mr. Market is finally asserting himself. I think the market is about to do THAT which the government should have done years ago: it's going to take a sledgehammer to this whole scheme and smash it to smithereens.

Share this post


Link to post
Share on other sites

What an aggressive de-ramping post that was !

 

I prefer more balanced arguments

 

" People lucky enough to weasel in to the private property market have been able to enjoy the benefits of astronomical asset inflation for decades, but we all know it was a sham"

 

???

Prices are lower than 10-12 years ago.

Where else in the world can you find that?

Share this post


Link to post
Share on other sites
What an aggressive de-ramping post that was !

 

I prefer more balanced arguments

 

" People lucky enough to weasel in to the private property market have been able to enjoy the benefits of astronomical asset inflation for decades, but we all know it was a sham"

 

???

Prices are lower than 10-12 years ago.

Where else in the world can you find that?

 

 

 

I prefer more truthful arguments. I've never read a balanced argument that wasn't an imbalanced argument in disguise, which contributed not one iota to its truthfulness.

 

?????????????????

 

?????????????????????????

 

Prices are lower than 10-12 years ago? You're referring to the 1997 price bubble? And what other property markets experienced a price bubble 10-12 years ago? Please share. I'll wait. Go ahead. If it makes you feel any better, prices are roughly where they were 15 years ago. The Dow Jones is exactly where it was 10 years ago. A lot of things are going to be exactly where they were 10 years ago, maybe even more. IF it's possible for the Hang Seng, why on earth wouldn't it be possible for the property market?

 

Prices are going lower. Whether my argument is preferred or not. Prices are going lower. In fact, I suspect prices are going _much_ lower for the simple reason that no one seems to think so. We're in the middle of largest economic catastrophe in modern times and somehow assets are going to appreciate, because low and behold, there's gold in them thar concrete hills!!!!!!

 

I think not.

Share this post


Link to post
Share on other sites
Prices are lower than 10-12 years ago? You're referring to the 1997 price bubble? And what other property markets experienced a price bubble 10-12 years ago? Please share. I'll wait.

Kindly read the thread.

There's loads of information here, and we are no where near the 18 year cycle peak in HK.

It isnt due until 1997 + 18 = 2015.

 

HK has the most expensive office space in the world, and so shouldnt it have the most expensive

residential property too?

 

Also, you should consider the fact that it has the largest number of millionaires per capita, one of the lowest

tax rates in the world, and a highly efficient transport system.

 

To me, this means that little money is wasted on transport, and tax payments, and so more money can be

spent on housing. It all adds up to a formula, which should make for the highest housing prices in the world.

That, plus limited supply, could mean that you and others will be shocked at the prices seen when the cycle

hits its high point, as I was shocked at the levels achieved at the high point in London's cycle

Share this post


Link to post
Share on other sites
Kindly read the thread.

There's loads of information here, and we are no where near the 18 year cycle peak in HK.

It isnt due until 1997 + 18 = 2015.

 

HK has the most expensive office space in the world, and so shouldnt it have the most expensive

residential property too.

 

Also, you should consider the fact that it has the largest number of millionaires per capita, one of the lowest

tax rates in the world, and a highly efficient transport system.

 

To me, this means that little money is wasted on transport, and tax payments, and so more money can be

spent on housing. It all adds up to a formula, which should make for the highest housing prices in the world.

That, plus limited supply, could mean that you and others will be shocked at the prices seen when the cycle

hits its high point, as I was shocked at the levels achieved at the high point in London's cycle

 

Kindly reread my post. You seem to have missed a few key points.

 

Yeah, the office issue is being handily dealt with by closings, relocations, and the old throw-the-developers some more projects remedy. And a little thing we like to call the global derivatives crisis.

 

Also, you should consider the fact that Hong Kong has the highest income disparity of any Asian economy, meaning that half the population can't afford a house, and the rest already own multiple homes. Your argument is tantemount to, the property millionaires are simply going to accumulate properties ad infinitum because, well, taxes are low, transportation to all those empty 2d and 3d and 4th flats is awesome, oh, and the venerable 18-year cycle.

 

To me, this means tons of money is wasted on redundant flat purchases (colloquially referred to as "speculating" in the vernacular), nearly 50% of the population cannot and will not be able to even begin to participate in any manner of home ownership, because certain select speculators think it is Hong Kong's divine duty to have the most unaffordable cement blocks on the planet, if only to match the stature of their towering glass edifices along the waterfront. So all you peasants get comfy in your roach motels, and be glad you're not slumming in Mumbai at least, eh?

 

And THIS is what passes for "balanced" argument?

 

Really.

Share this post


Link to post
Share on other sites

You are trying to put alot of words in my mouth.

That stiffles debate

Share this post


Link to post
Share on other sites
You are trying to put alot of words in my mouth.

That stiffles debate

 

I've in fact done no such thing. Worse still, you haven't even made an effort to address a single point I've made. I can't imagine what is more stiffling. Besides, I do believe it is you attempting to brush off my posts with rather silly dismissals.

 

What sort of investment "forum" are you attempting to run here, when people who don't say what you like in a manner to your liking are simply brushed off or dismissed.

 

How utterly childish.

 

You may want to broaden your perspective a little sir. You might find it of benefit to future investment matters to consider other's opinions, whether they are expressed in a manner pleasing to your ear or not, and whether they agree with your self-painted "balanced" world view or not.

 

Share this post


Link to post
Share on other sites

FINE.

Then I suggest you move on, and find a Forum more interested in debating with you.

It isnt here. You obviously have "a chip on your shoulder", and alot of anger and jealousy.

I expect more from GEI members

Share this post


Link to post
Share on other sites
FINE.

Then I suggest you move on, and find a Forum more interested in debating with you.

It isnt here. You obviously have "a chip on your shoulder", and alot of anger and jealousy.

I expect more from GEI members

 

I couldn't have put it any more infantile myself. Well done old chap!

 

This reminds me handily of the old law school dictum, "If you can't argue the facts, argue the law, if you can't argue the facts or the law, blow smoke."

 

 

If it's any consolation, every news day brings more confirmation of the down trend, or put another way....

 

 

I'm right.

 

 

But let's not let silly arguments get in the way of FACTS....

 

 

Hong Kong property buyers bide their time

 

http://www.ft.com/cms/s/0/e44a3d56-04f4-11...?nclick_check=1

 

 

Tenants Play Hardball

 

http://www.bloomberg.com/apps/news?pid=206...id=asoZu0ThVUtc

 

 

HK, Singapore bear brunt of property slump

 

http://www.themalaysianinsider.com/index.p...-property-slump

 

 

Hong Kong’s Exports Fall by Most Since 1958

 

http://www.bloomberg.com/apps/news?pid=206...id=a_L4aMRjkOQ0

 

 

 

Hong Kong property prices are going much, much lower. Prices are weak now with the lowest rates in a decade, once inflationary pressures kick in and interest rates are ramped back up, the property market will suffer.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×