Panic selling can only happen when businesses are hit hard

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Buy something to live in, not for speculation because the latter is like gambling. This was what Hong Kong’s third-richest man, Lui Che-woo advised in an article in South China Morning Post here.  I think his advice is a sound one. 🙂  In the same article, investment bank CLSA has predicted that property prices would drop 15 per cent over the next 12 months in the face of rising interest rates, a slowing economy and depreciating yuan. Besides CLSA, two other banks; Citibank and UBS have also predicted a sharp downturn. Property consultants Knight Frank said that Hong Kong’s home price growth would decelerate in the second half due to government intervention and external uncertainties. Do refer here for the full article again. 

As for the potential for panic selling, I think another article in South China Morning Post may have summed it up best. Here’s that article.  The writer says that despite all these warnings of a correction, it will be hard to see price of prime property in Mid-Levels or other core districts in Hong Kong drop, all because of the limited supply. Thus, a price correction, if it happens would be in areas like Tung Chung and other outlying districts further away from the city centre. He said that there will be no panic sell-off unless the economic slowdown hits businesses hard and cause job losses. This is when millionaires in Hong Kong lose their fortunes overnight. This will be the only reason for property prices to fall and this may include the core areas. Without these, then only the weak will sell in panic. That article can be referred here. 

Much earlier, remember there is now a huge number of unsold units here in Malaysia? Despite all the unsold units, there will be no property bubble bursting. Truth is, property bubble bursting is essentially a sudden substantial drop in property prices and this happens ONLY if the owners of units suddenly face problems in paying for their mortgages. Here’s an earlier article:  Potential for property bubble bursting, signs to look out forAgain, when the market slows down, we can already see that the popular areas would still see firm selling prices. Main reason is due to location supply scarcity. (click here for earlier article) In brief, there’s just much more demand than there are of supply for many of these mature neighbourhoods; hotspots. In conclusion, waiting for that one property which everyone is also waiting is usually not going to be productive. Happy viewing.

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My latest iExpert Video on “Buying into Hotspots versus Secondary Spots.”

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