As a property bull who has his own Hong Kong-dollar investments heavily weighted towards the property sector, both directly and through the stock market, I can only be delighted when people talk the market up.
Thus it was pleasing to pick up Thursday's paper and see a headline that read: 'Lending upswing raises property hopes'. The report underneath outlines that new mortgage loans in December soared 41.1 per cent to HK$11.57 billion, marking a reversal from a steady decline that began in July last year.
Alas, a check with the data base shows that it does not really mean that much after all. The first chart shows the monthly record of new mortgage loans over the past nine years, more peaks and troughs than the Rocky Mountains. If that latest figure really marks the beginning of a trend we shall need a few months more data to confirm it.
The same thing goes for recent figures showing that there were 9,723 property transactions in November, up 87.6 per cent. Yes, when measured over October, and in December they were down again by 21.2 per cent over November. Take them for the year overall and we are still scraping along the bottom.
Let us think here instead as a property analyst is meant to think ('meant' because so few actually do). The idea is that your eyes are in the front of your head, not the back, and you do better when you have them focused in front of you.
Look at the second chart. Taking things from the beginning of 1997, the red line shows HSBC's worst lending rate (WLR, but they still actually . . . chuckle, chuckle . . . call it the BLR for best lending rate) and the green line shows the weighted average interest rate for new mortgages.
This is now easily more than 200 basis points lower than the WLR, which is not surprising when the banks overall show a record low 82 per cent loan-to-deposit ratio on Hong Kong-dollar operations.
