bambieboy

I am currently renting a property and the lease would come to an end in June 12. I am debating whether buying a property or enter into another lease agreement. People are saying the property price of HK would drop with the new government start in July, headed by CY Leung. What is your view?

PeteinHongKong

Property prices in HK constantly adjust to a variety of factors - both local and international. If you mean will they drop by the 25-30% some people have suggested I seriously doubt this as CY Leung as a property man himself knows only too well the likely implications. Interest rates remain low, inflation relatively low and incomes have been rising. In terms of affordability HK is nowhere near as bad as it was during the big housing boom of the late 80s/early to mid 90s. There is a strong relationship between the performance of the stock market and property prices - a sustained rally in the markets often seems to result in money being converted into property. I don't expect prices to zoom up anytime soon but a period of relative stability seems more likely. I do own properties in HK and have not seriously considered selling. The small flats I have bought over the years are all on HK Island where property tends to trade at a premium for obvious reasons. I would not look elsewhere unless seriously constrained by price.

hong_konger

I would doubt it. Prices go up and down. However, there is and will be an ever increasing demand for Hong Kong property from mainland buyers and that will maintain / slowly drive up property prices over the medium to long term. In the absence a major financial crisis (or another SARS) there should not be any more boom and bust scenarios.

Are you thinking of any particular proposed policies that CY Leung intends to introduce ?

bambieboy

This is exactly that I am thinking too. Mainland buyers are one of the main reason that boost up the property prices

PeteinHongKong

I think many mainland buyers are looking at purchasing higher end properties. The main demand from locals is at the lower to middle levels. The stamp duty rule changes did restrain prices for a while. Hong Kong is a very interesting property market. Post-1997 and the Asian financial crisis property pundits were saying there was never a better time to buy in HK after prices dropped 10%, they repeated this mantra as prices slipped 20, 30, 40% - then they shut up and prices bottomed out 60% lower than the peak. On the upside, people often underestimate the speed and strength of a rebound.

hong_konger

It certainly is ! I know someone who bought a house pre-SARS around the 1997 peak for around HK$11m. During SARS and for quite a while afterwards the market value dropped to HK$6m and they lived in negative equity for years thinking they had made the biggest mistake of their lives and all their life savings had gone up in smoke. Then with the recent boom prices shot up again and they sold for HK$16m about a year ago !!!