Fallacies afflicting the Hong Kong property market naysayers
I don't fault our reporters for such contradictory forecasts. They report what the industry professionals say and what the industry professionals say is usually contradictory.
That's what you call a market. The optimists and the pessimists are in balance at the prevailing price. If they were all optimistic the price would be higher and opinion would come back in balance again. If all were pessimistic the price would be lower and a 50/50 ratio in opinion restored that way.
Got it? Congratulations, you may now skip the first two years of an economics degree.
Yours truly, however, is not a man of balanced opinion. I am in the it's-going-up camp. I think there is plenty of strength left in the residential property market and I have heard the doom forecast so often over the last five years that it rather slides over me now.
My view rests on one essential call. The US Federal Reserve Board is composed of a flock of chickens who squawk loudly about interest rates but dare raise them only marginally. The US economy and financial markets will not bear more without crumbling into recession.
Now let's deal with some of the reasons that CLSA, a local stockbroker, cites for its pessimism:
And the ratio of notified Hong Kong cases of whooping cough to the average maximum attainable speed of Lamborghinis sold in Guangdong last month is 3.67 per cent, which is a 12-year low.
Put another way, if you need more to give you perspective, the chart sets out the Centaline monthly figures on the number of sales and purchase agreements in the primary market over the last 15 years. Do you see anything here to help you call the property market? Good for you.
At 2,000rpm, each piston in the engine of my car plummets 33 times a second. I don't have the chart on how often this sell-through rate plummets, but I imagine it's in about the same league as those pistons.
And CBRE says that a 598 square foot public housing flat at Fung Wah Estate in Chai Wan recently sold for a record-breaking HK$4.4 million. Anecdote is always a more convincing sales tool than the broad statistical record. Restrict it to the sales pitch, please, fellas.
What pearls of wisdom come from these gurus of "investment banks." Here is their mantra:
