Zhang Xin, who had once worked as a Wall Street analyst, is the fifth richest, self-made billionaire in the world. The residential market, which she has avoided, is another story.
Well, the nine-year run-up in Hong Kong housing prices cannot go on forever. One day it must stop. And then home prices in the city will fall — a lot.
The difficulty is working out when that day will come. The upward track in Hong Kong property prices since the financial crisis has been liberally dotted with gravestones of the reputations of analysts who called the end of the great bull market too early. As long ago as Decemberbarely nine months after the depths of the crisis, the International Monetary Fund was warning about the risks of a dangerous bubble in the Hong Kong property market.
And, ever since, prices have continued to rise. Last week the Centa-City leading index of secondary market prices hit a new high, fully per cent above its level when the IMF first issued its bubble alert back in Of course, that may mean the risk of a property bust is more immediate than ever.
After all, every day seems to bring news stories about how overinflated the local property market has become. There is, without doubt, a strong whiff of late cycle craziness about it all.
Yet the experience of recent years teaches that seemingly overextended cycles can last a lot longer than anyone initially thought possible. Initially they were blamed for pushing prices higher. Then it was feared their absence, as the mainland authorities cracked down on capital outflows, would precipitate a collapse.
Today, the Centaline Property Agency estimates they account for about 10 per cent of purchases by number, and 15 per cent by value.
In short, there is no sign that mainland buying is drying up. Hong Kong flats could be cheaper and easier to buy, but Second, the big one: With the vast majority of new mortgages linked to local interbank interest rates, that liquidity has kept local mortgage rates down even as US dollar rates have risen.
As recently as six months ago it was possible for Hong Kong buyers to take out home loans at interest rates as low as 1. Over the past few months, however, local interbank rates have begun to creep higher, in part because the Hong Kong Monetary Authority has sought to drain liquidity from the market.
As a result, local interest rates have narrowed the gap with US rates, as US rates themselves are pushing higher.
Today, that same mortgage would come with an interest rate of 2. How much would that matter? A doubling of mortgage rates certainly sounds painful. But for the most part Hong Kong homebuyers are a relatively cautious bunch.
But it is unlikely to prove ruinous. This is no Minsky moment: Clearly some belt-tightening will be necessary. But the squeeze will be nowhere near as severe as the one which helped precipitate the housing crash ofwhen with local prime lending rates at 10 per cent, mortgage service costs ate up two-thirds of income for moderately leveraged homeowners, and more than per cent for a good many households.
In short, with mainlanders continuing to buy, and with rising local interest rates not quite the immediate threat that many observers fear, in the absence of an international economic shock Hong Kong property prices could easily continue to push even higher in the near term.Even if China’s long-term growth thesis remains intact, the same was also true of the US in ; China could conceivably experience a Great Depression of its very own when its bubble pops.
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While the world has been laser-focused on the woes of the heavily-indebted PIIGS nations for the last couple of years, property markets in Northern and Western European countries have been bubbling up to dizzying new heights in a repeat performance of the very. Responses to “Foreign investors in Southern California: Over half of new homes in Irvine purchased by Asian buyers.
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Hello Kenarry readers! We are Jennifer and Kitty from Running With Sisters, and we are super excited to share one of our favorite crafts – making mosaics with broken china!. We love to mosaic. It really feels like we’ve made something when we’re through. And our favorite thing to mosaic with is broken china.
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