On Friday, the University of Hong Kong released their Hong Kong Residential Real Estate Series indicating that, in May, the price of residential properties increased 2.01% since April climbing 26.52% above the level seen in May 2010.
The “Hong Kong Island” index, “Kowloon” and “New Territories” sub-components also showed notable monthly and annual increases with the "Hong Kong Island" series indicated that prices have now far outpaced the prior 1997 peak.
This will all end soon.
Note: Prices are going up dramatically are not the signal an end to this bubble is near, it is that China's Central bank has dramatically slowed money supply printing, which means the current real estate structure can't be supported long term. The same amount of new money that props up the real estate sector just won't be there.
Why should China's central bank impact Hong Kong real estate? They don't even use the RMB...
ReplyDeleteThe old saying was when the U.S. sneezed, the rest of the world caught a cold. The new saying will be, when China gets the flu, Hong Kong will catch a cold. Hong Kong is too close for comfort. The downturn in China will be very severe and can't not impact the Hong Kong economy.
ReplyDeleteMy friends from HK are telling me that there is a crazy amount of mainlanders coming over and buying flats, sometimes even for cash.
ReplyDeleteThe Hong Kong dollar is pegged to the US dollar so the Hong Kong government prints a ton of money as they do in mainland China. The price level here has increased a lot in only a couple of years. Going to the supermarket to buy food is almost painful, it's that expensive. And you have at least 1,5 million people in Hong Kong who are poor. A relative term but with the prices going up as much as they are doing, it's getting extremely difficult for poor people to stay afloat here. Pay rises is not a common thing.
ReplyDelete@NagyGa1 is totally right. The filthy rich mainland Chinese goes to Hong Kong and purchases flats everywhere. Some buildings are almost totally dark in the evening because most of the flats were bought by mainland Chinese who doesn't even live there. They just bought it as an investment.