Improper:property 2011

(written on April 2011 ..comments on HK property market 2012? need some input for next week hah thanks a lott~~)

(1) 13-year high: End of property market bull cycle in 2011?

Facts:

1. HK residential property price has already exceeded the peak sky-high price before the 1997 property bubble burst
2. ..and is still steadily soaring. Home prices increases by 60% in 2 years.
3. No. of real estate agents surged by about 40% in one year ..even my aunt decided to quit her job and join the league.
4. The highest-paid fresh-grad job in Hong Kong no longer goes to doctor or lawyer — In Class of 2010, a private property investor with 100K HKD monthly income topped the list.
5. In 2011, HK has the highest home prices and income disparity in the world.

Reasons:

• Shortage of land, properties and public housing
• Dominance of giant developers: win land auction everytime and construct luxury apartments.
• Influx of mainland investors and cash flow: buying in HKD is a cheap 20%-off deal to mainlanders
• Low borrowing cost/interest rate environment
• Currency peg: QE 1 and QE 2, weak dollar = weak HKD.
• real buyer VS speculators: local buyers could never pay their first installment with speculators pushing up prices.

Cooling measures:

• Quarterly land auctions: the government is proposing a regular schedule for land sales + 12 land sites release  to further boost supply
• Additional stamp duty on short-term sales: sellers are subject to a 5-15% additional stamp duty if they resell their homes within 2 years to discourage speculation.
• Tightening borrowing requirement in banks: banks raised mortgage interest rate and down payment

F1oni’s forecast:

• It’s about time. Say no to Keynesian–follow business cycle and let it burst.

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