HK - Housing 01 (May 08 - Aug 11)

[winston]

HONG KONG ECONOMIC TIMES

-- The property market predicts number of secondary property transactions in July will be between 6,000 and 6,200 - the lowest monthly figure since December 2006, according to Midland Realty.

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From Dr. Check:-

Yesterday, I made the point that European expatriates have not benefited much from gains in Hong Kong property values.

Also, there is no sign home buyers in Hong Kong are excessively in debt. That is why the Centa-City Index of property price movements is only down about 5 percent even though the Hang Seng Index had dived 30 percent from its peak.

Some investors who hold more than one property may see this as a good time to sell. But we do not see end users selling to rent. The present situation is unlike in 1997, when some shrewd friends of mine sold everything, their investment properties and the ones they were using.

Their argument for doing so was simple. They thought the bubble had burst and prices would fall more than 30 percent, making their decisions logical.

So, unless you think property prices will fall more than 30 percent, end users cannot justify a decision to sell.

The figures bear out this point.

The costs (including the agent's commission, legal fees and moving costs) of selling your own home and buying another are around 5 percent. The renovation costs will amount to around 10 percent of the home purchase price.

If you sell your last home and rent, the rental costs will be 5 percent per year. Assuming you rent for three years before you repurchase, that will be 15 percent.

So, when end users add up the costs of selling their old flats, buying new ones later and renting in between, they get 30 percent.

Unless you think the property market will drop deeper and last longer in a slump, it is better to keep your own flat, especially those quality ones.

[winston]

Negative equity mortgages in Hong Kong continue to fall

HONG KONG, July 28 (Xinhua) -- The number of residential mortgage loans in negative equity in Hong Kong fell further to 936cases in the second quarter, with an aggregate value of 1.7 billion HK dollars (0.22 billion U.S. dollars), the local Monetary Authority said Monday.

The number was 17 cases less than that of the previous quarter and represented a plunge of 99 percent from the peak of 106,000 cases at the end of June 2003.

The estimated unsecured portion of the loans remained unchanged at 200 million HK dollars. The loan- to-value ratio of the negative equity fell to 112 percent from 118 percent at the end of March.

The three-month delinquency ratio of the negative equity residential mortgage loans dropped to 0.61 percent from 1.13 percent at the end of March.

[winston]

HONG KONG ECONOMIC TIMES

-- Property transactions have dropped among top estates in Hong Kong, hitting the lowest levels since the SARS pandemic in 2003.

Prices, however, could still fall further.

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APPLE DAILY

-- Hong Kong's monthly parking costs rank fourth highest in the world, according to a property survey. A non-designated spot in top-ranked London would cost HK$9,100 while one in HK would cost HK$5,790.

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Hong Kong Housing Market May Slow as Apartment Sales Decline
By Kelvin Wong

July 30 (Bloomberg) -- Hong Kong's apartment transactions may fall to a 10-month low in July, then drop further, on concerns that accelerating inflation and a slumping stock market may push prices down, analysts said.

Transactions in 10 of Hong Kong's biggest housing complexes, used by many analysts as a benchmark, fell to 27 last week from 33 the previous week, Centaline Property Agency Ltd. said. Total home sales in the city may drop to 6,100 in July, the lowest number since September, from 7,167 in June, Centaline said.

``This will probably continue for the whole of the third quarter,'' said Louis Chan, managing director of residential properties at Centaline. ``We're looking at between a 3 and 5 percent correction in prices within the quarter.''

Home values have tracked Hong Kong's economy, peaking in the second quarter of 1997, then crashing in the Asian financial crisis, leaving many homes worth less then their mortgages for years. The 2000 dot-com bubble burst, the Sept. 11, 2001, terrorist attacks and the 2003 SARS epidemic caused prices to fall as much as 70 percent from the peak. The rebound started in late 2003 and prices doubled in the past four years.

Now, the benchmark Hang Seng Index has fallen almost a third from its record in October as credit-market losses climbed worldwide, threatening global economic growth even as inflation accelerates in Hong Kong. The combination could deter potential homebuyers, possibly for the balance of the year.

``The Hong Kong residential market will go into a quiet period for the rest of 2008,'' said Cusson Leung, a Hong Kong- based analyst at Credit Suisse. His July 8 report forecast a 5 to 10 percent reduction in home prices in the second half.

Agencies Fire

Overall housing transactions in the second half may fall between 20 and 30 percent from a year earlier, said Patrick Chow, head of research at real estate agency Ricacorp Properties Ltd.

``Many people looking to upgrade their properties again have had their capital drained by the stock market,'' Chow said. ``This may seriously impact the high-end market, in part because many of those homebuyers had upgraded last year.''

Hong Kong's four biggest real estate agencies this month fired a total of more than 300 workers in anticipation of a housing slump, according to a July 23 report in the Hong Kong Economic Times newspaper.

Hong Kong's inflation accelerated in June to the fastest pace in four months as food and energy costs climbed. Local lenders including BOC Hong Kong (Holdings) Ltd. and Hang Seng Bank Ltd. last month raised their mortgage rates for some customers to deflect the squeeze on lending margins.

``Inflation is giving many people second thoughts about buying properties,'' said Alnwick Chan, a Hong Kong-based executive director at property research company Knight Frank LLP. ``There's going to be a correction but it won't be a crash.''

Asia's Most Expensive

Hong Kong has the most expensive luxury home prices in Asia, $10,490 to $14,780 per square meter ($975 to $1,375 a square foot), according to the Global Property Guide Web site. That compares with $12,510 to $22,923 per square meter in Manhattan.

The Hang Seng Properties Index, which tracks the city's six biggest builders by market value, has dropped 30 percent this year on concerns Hong Kong banks may lift rates.

The expectation that the U.S. Federal Reserve will start raising interest rates in the fourth quarter of this year has damped Asia's stock markets, according to Credit Suisse. Hong Kong's rates move with those of the U.S. because the city's currency is linked to the dollar.

Sino Land Co. sold almost 70 percent of the apartments it made available at the Palazzo, a high-end complex overlooking the Sha Tin horse track in the first nine days of sales, Sing Tao Daily reported in May. Billionaire Li Ka-shing's Cheung Kong (Holdings) Ltd., Hong Kong's second-biggest builder by value, met full-year sales targets by June, selling 2,700 apartments for HK$23 billion.

Transactions and prices may rebound in the fourth quarter if both the U.S. and Hong Kong stock markets show they have weathered the subprime crisis, Centaline's Chan said.

The property affordability ratio, homeowners' average monthly mortgage payment as a percentage of income, is 32 percent, ``a very healthy level'' compared with 93 percent at the peak of the 1990s boom, according to Buggle Lau, chief analyst at Midland Holdings Ltd., Hong Kong's biggest publicly traded property agency.

``Growth is definitely slowing, but the fundamentals of the economy are still strong,'' Lau said. ``When the uncertainties go away we're pretty sure buyers are going to come back.''

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Olympics slows housing deals
MandyLo
Thursday, July 31, 2008

Analysts expect July housing transactions to drop 15-30 percent from about 7,000 deals last month and predict a subdued market for the rest of the year.

Prices for July may be down 5 percent because of the volatile stock market and uncertain economic outlook, said Willy Liu, executive director at Ricacorp Properties. Liu said many potential buyers are waiting until after the Olympics before making a decision.

Eric Wong, an analyst at UBS, also said he expects the number of deals to increase after the Olympics.

Besides uncertainty over the financial markets, the number of transactions was also lower because of a lack of new projects launched in July, said Buggle Lau, at Midland Realty. "Following the launch of two new projects in May, about 1,700 and 300 new units were sold that month and in June, respectively. But there was almost nothing left for July," said Lau. He estimates transactions will average around 7,000 a month during the third quarter.

Centaline Surveyors director James Cheung expects total transactions for this year to be the same as 2007.

[winston]

HONG KONG ECONOMIC TIMES

-- Property market watchers believe housing prices will begin to stablise but not before another five percent drop in values.

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TA KUNG PAO

-- Investment companies have predicted a decline for the rental rates for core area offices in Central.

Rates have dropped based on figures for the first half of the year and the worst case scenario for end-2009 is a fall of as much as 49 percent.

[winston]

HONG KONG ECONOMIC TIMES

-- The secondary property market has recorded more transactions as homeowners lower their asking prices and allow negotiations.

Midland Realty reported stronger figures with signs of bargain-hunting in the market.