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Buying a flat in HK: what will the market do?
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| posted by RastaMan 256 days ago (edited 256 days ago) |
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Thanks. I would get a 85% mortgage, or between 80 and 85%, because I only have 1/2 mio bucks in the bank.
About the length of the mortgage, the banker I just talked to said that I can get a mortgage, but usually only for the first 25 years of a building, so normally they would only give me a mortgage for 5 years. BUT if the big boss agrees they can give me longer. Perhaps 15 years altogether, but very unlikely more than 15.
Apart from the feasibility from the part of the bank (I will find that out later), if I want to sell the property once I paid it off (in 20 years), and the building will be 40 years old, will my flat have any value? In HK any building older than 30 years seems to be ancient history and pretty worthless because nobody wants to buy it.
What do you mean with the Indigenous rights land that I have to be careful about? I would own 1/6 of the house, but I don't think I would own the land. Don't only Akka are allowed to own land in HK? So I guess if my flat has no value in 20 years I won't get anything, because the land belongs to someone else, right?
I want to die peacefully in my sleep, like my Grandfather.
Not screaming and in terror, like his passengers.
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| posted by Zebedee 256 days ago |
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I'm very bullish with HK property, but 40% in next 12 months is seriously head-in-the-cloud stuff, no financial fundamentals to support that theory other than guess work, sorry to sound rude; but nevertheless, when in investing in property should always look at 5-10yr view, rather than 12 month view. My view, likely interest rate movements and low supply will help HK property in 2008, but beware a slewth of new property is hitting market at end of 2008 to 2010, so will affect prices. End of 2007 early 2008 is supposedely the least supply of property on market in HK for almost 30yrs, but this won't last. Finally, both property and equity markets in Asia are entering a period of being caught between their own soundly based fundamentals and the precarious state of other economies around the western world i.e. as you'll read in almost all commentaries, HK will always be affected by what happens in US and Europe, and both these places are looking to be in trouble throughout 2008-2009.
Whatever...
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| posted by Paps of Jura 256 days ago |
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The rise of the Soho area is as you state serious head in the clouds stuff but's it's happening right before our eyes.. BTW I'm not blonde
Just to give you an idea..bought my flat 2M could sell it tommorow at 2.8M with a tennant in it paying 16.5K... with a renno of 170K... not a bad return I'd say
No doubt the arse will fall out of it at some point but at the moment it just keeps rising
Dib Dob nib knob
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| posted by Zebedee 256 days ago |
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Paps, I don't doubt what you're saying, and didn't for one minute want to imply you're a dumb blond, you've obviously done well with your Soho property - simply don't make predicitions for the HK market, based on one or two examples that you've experienced yourself.....I don't believe the arse will fall out anytime soon, people still have a lot of cash in the banks in HK and soon interest rates on deposits will be in negative territory, after inflation.....with that happening, HK population will start to move more money from bank deposits to buy assets as a hedge against inflation.....with low interest rates people will borrow to buy property. Btw, don't forget all transactions costs in your buying / selling property, brings %% down from 40% !
Whatever...
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| posted by RastaMan 256 days ago |
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I believe your tenant pays more than your mortgage?
My question remains: how much would a flat in a 40-year old village house be worth? Is there a gradual drop in the price of housing after a village house reaches 20 years of age?
The housing market here seems very speculative. I passed in front of the BOC gambling office (I mean, investment office) on the way to the mortgage office this morning, and it seemed pretty scary. All these retired men, gambling their life savings. Very close to the scene at the horse racing.
I want to die peacefully in my sleep, like my Grandfather.
Not screaming and in terror, like his passengers.
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| posted by spannermonkey 256 days ago |
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Rasta,
Its impossible for anyone on here to say how much your village house flat is worth, but you should seek the advice of your agents for comparables. Tread carefully with village houses as they are generally not as straight forward as apartments. With regard to the tenure of your mortgage, there are guidlines which the banks follow, however its all negotiable and if you have a solid financial background with a good credit history, you can really go to the extremes in terms of tenure. However, this again is all dependent on the location. As mentioned already, village houses tend to be a bit complicated, so the banks exercise caution and may be pesemistic.
The housing market in HK is speculative, but no longer to the extent of the '97 era as the economy and employment is very different now. If you are in it for the long term, then dont think too hard about it and go with your gut feel; if you are in it for a quick buck, then you need to be savvy with your purchase.
As far as the future goes, I'd go with 20-25% overall for 2008, with high end luxury units getting up in the high 30%. 2009 will cool off a little as interest rate cuts stop occuring with such frequency, but you'll still see 15% (on 2008 figures), providing employment stays high and salary levels keep up with inflation.
All in all, you cant go too far wrong, but dont throw everything you have at it.
http://www.marisamiller.com
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| posted by Gimpmask 256 days ago |
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20 years is not hold if it is built well. Certaily apartment blocks aged 30 years+ are still selling for millions of dollars in mid-levels. I have no idea how that translates to 3 storey town-house (probably funded by the original landlord as opposed to a property developer).
Town houses are not as "straightforward' as apartments because their title deeds are often imperfect; have many illegal structures (maybe even the whole floor is illegal) and would be a bugger when you try to sell it 20 years down the line. Don't worry, your conveyancing lawyer will definitely charge you extra for their service.
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Having testicles is like being chained to the village idiot.
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| posted by xpat-Aussie 256 days ago |
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There are also markets within markets with property. Soho as Paps says, has risen a lot recently, however, for each day that it rises, the chances that the run is peaking increases. Housing bubbles form slowly, and deflate slowly. HK obviously saw a drastic decrease in prices after SARS, and it still hasn't recovered. This is not to say that the pre sars prices were reasonable and therefore there's no gaurantee that they will get back there. Take a look at Japan in the last 10 years, those figures speak for themselves. I consider HK to be much higher risk than say Australia (were I have all my property investments).
The common theme here from everyone I think, is that if you're in it for the long haul, then it's a great investment. Forget worrying if it's going to rise by 5% or 35% in the next 12 months, just don't pay more than any one property is worth. If you pay too much, it'll be a long time before you start making money on it. Try and source the figures for the long term growth trend and make your decision based on that.
"...and once you have tasted flight,
you will walk the earth with your eyes turned skyward,
for there you have been and there you long to return...."
-Leonardo DaVinci
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| posted by RastaMan 256 days ago |
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Thanks a lot.
One thing I wonder: Suppose I buy the flat, keep it for 5 years, and then the owner of the land decides to sell the land to a promoter, and the promoter decides to build a high-rise building (or whatever). What happens to my flat? Can I be forced to sell? At what price?
That's purely a theoretical argument. I am just curious! Thanks!
I want to die peacefully in my sleep, like my Grandfather.
Not screaming and in terror, like his passengers.
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| posted by Gimpmask 256 days ago |
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Yes, I think the new regulation says if the "promoter" has 90%, he can force the remaining 10% to sell. Can't be bothered to look up the details.
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Having testicles is like being chained to the village idiot.
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| posted by Paps of Jura 256 days ago |
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It happens a lot in the older building blocks.. If a majority of the owners in the block agree to a buy out by a development company then they all walk away with a tidy sum.
Dib Dob nib knob
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| posted by crusty 256 days ago |
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I'd be weary of HK agents giving you buy quotes for your place in SOHO, afterall your place is worth whatever somone actully pays for it at the end of the day, not what the LL claims he can get for it.
HK Agents are notoriously sharky
Rehab is for quiters
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| posted by hongkonger 256 days ago (edited 256 days ago) |
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quote:
Originally posted by xpat-Aussie...........housing bubbles form slowly, and deflate slowly.
mate you weren't here in 97, the price of property had reach extreme stupid levels, the market collapsed practically overnight ;)
And never, ever believe one word from an estate agent. Ask to see their book, with the last few transactions
We will consume 85 million barrels of oil today, what's going to be left for tomorrow?
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| posted by Paps of Jura 256 days ago |
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Or keep your eye on Centaline transaction records
Dib Dob nib knob
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| posted by bunthorne 256 days ago |
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I thought they stopped that a couple of years back. Can't find that site anymore.
Post an updated link could you.
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| posted by Load Toad 256 days ago |
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No there are various sites with transaction details on.
Average by Intention.
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| posted by test 256 days ago (edited 256 days ago) |
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Further my landlord paid and those around me paid 6.8-7.2 million and their apts are now worth 3.5-4.0 so it really depends on the area and agents will tell you only pie in the sky and that the market is only going up. A local agent told my friend to list her flat here at 4.0 and there it sits 4 years later still for sale at 4.0.
Buyer beware never listen to an agent, check the transaction records yourself.
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| The Maintenance Man |
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| posted by ServerGuy 256 days ago |
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Mmmmm, yes but I have friends that purchased at HK$ 4m around 3 years ago and their place is now worth (and they have had offers of) HK$ 9.5m over the last 6 months.
If you have got any problems with this site send them to Support@HKExpats.com Thanks
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| posted by shazza 256 days ago |
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quote:
Originally posted by RastaMan
Thanks. I would get a 85% mortgage, or between 80 and 85%, because I only have 1/2 mio bucks in the bank.
About the length of the mortgage, the banker I just talked to said that I can get a mortgage, but usually only for the first 25 years of a building, so normally they would only give me a mortgage for 5 years. BUT if the big boss agrees they can give me longer. Perhaps 15 years altogether, but very unlikely more than 15.
Apart from the feasibility from the part of the bank (I will find that out later), if I want to sell the property once I paid it off (in 20 years), and the building will be 40 years old, will my flat have any value? In HK any building older than 30 years seems to be ancient history and pretty worthless because nobody wants to buy it.
What do you mean with the Indigenous rights land that I have to be careful about? I would own 1/6 of the house, but I don't think I would own the land. Don't only Akka are allowed to own land in HK? So I guess if my flat has no value in 20 years I won't get anything, because the land belongs to someone else, right?
$3M for a 20 yr old top floor flat with roof, I assume it's 700 sq ft village house, sounds very expensive to me. Have you checked the similar property nearby?
You should prepare to spend quite a bit to rewire the whole house with that age if it hasn't been renovated lately (or at all), village houses are built more poorly compare to the blocks in town.
Calculation for the length of the mortgage for some banks is the age of house + mortgage length = 40 years. The bank you are dealing with doesn't sound very helpful. Check with few other banks but don't go to HSBC, they don't give much s**t about those properties.
Lastly, make sure you get a laywer with (well) experience in dealing with village houses. They then wont be as complicated as you think.
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