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Dangerous, when property turns unaffordable

The day when no one could afford any property being put up for sale would be the day the property market collapses. Just imagine 100,000 units on the market and not even one is sold… Panic sets in and selling low starts. Likelihood of that happening? Hopefully not but seriously, who would know? Based on current numbers, well, unlikely. That’s true even for the US. Here’s what a powerful American lady said recently. Yellen: Next financial crisis not happening during our lifetime 
When we worry about the property market’s direction, look at those markets which are more advanced than us. Markets where the population is already used to paying higher and accepting ever smaller units. Here’s an earlier article: Buy a Tesla or buy a micro=flat? Both similarly ‘sized.’ In fact what my staff told me was that most Hong Kong fresh graduate has already resigned to the fact that they may never be able to get a property. Yea, I heard some young Malaysian friends saying the same thing too.
Here’s one latest article about the state of the Hong Kong property market. It’s DANGEROUSLY high. Here’s that article by Bloomberg in TheStar. It says that first-time buyers are struggling to buy a unit within the world’s priciest market. (No, it’s definitely not Singapore, when it comes to property, even after conversion) According to Centaline Property Agency, the number of new flats smaller than 431 sq ft has increased to 1,400 and may rise to 2,000 units by year end.
Financial Secretary Paul Chan has cautioned of a “dangerous situation” after repeated efforts to cool the market. Despite the small size, the ‘affordable’ price of HK2.8 million (RM1.53 million) meant that 82 out of 95 units launched in Sham Shui Po was sold. Bocom International Holdings Co. analyst Alfred Lau sums it up by saying. “It could be dangerous when these small flats are unleashed onto the second-hand market after the demand is filled up in the next three to five years.” Full article here.
Remember, the most dangerous thing that could happen to a property market is when a bubble bursts. A bubble an only burst when it could no longer be supported. Thus, just look around. When no one could get their loans approved because their salaries are just too low for the property price they want to buy, it’s about time to worry. I joined a meeting of real estate agents this week. The property market is still full of ‘opportunistic’ buyers.
My close friend also shared with me that a condo she wanted to buy was also eyed by another buyer. She has offered her price. I hope she gets it too. She asked, ‘I thought market is slow?’ I told her that even if transaction numbers are showing a downtrend but the number of transactions continue to show that there are still a huge group of buyers. Perhaps the only missing group from the transaction numbers may be the first time buyers who are more worried and less daring. Happylooking around and understanding.
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written on 3 Aug 2017
Next suggested article: Think. Why first time home buyers need help

Property Investment always start with knowledge. Equip ourselves with more here.

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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