The weekly Property Post supplement to the South China Morning Post carried a front page article on how professionals are still bullish on the Hong Kong property market.
Refreshingly, the professionals being quoted were actually investors as opposed to permabull real estate agents. These are investors who put their own money into the market. The expectation was for a small drop in prices (5-7%) due to a combination of factors (declining share indices, small rises in interest rates and general economic uncertainty) before the fundamentals reassert themselves and the uptrend continues. All of the investors quoted were intending to hold their positions and, in most cases, look for opportunities to add to them.
Among the fundamentals cited were:
1. limited supply of new units
2. rising rental incomes (up 19% year on year)
3. cheap debt finance (still below 3% for new loans)
4. readily available debt finance (banks are still keen to lend and have excess deposit build up)
5. lack of alternative places to invest (close to zero percent interest on short term bank deposits and inflation rates above 5%)
The longer term case for property investment in Hong Kong remains solid.