My two cents worth; which was $1 about 90 years ago and be worthless in a few years time:
If you own a home, keep it ...... IF:
· You have factored in a significant increase in interest rates. If not re-evaluate how much debt you are carrying. IMHO around $5M in debt is a good balance of risk v reward, and very wise use of the CX housing allowance.
· You intend staying in Hong Kong for a while. If not, now might be a good time to get out. If you don’t need the equity in your home country ... keep the house and rent it!
· You are far enough up the seniority list to not be affected by a company downsize! If you are new to CX and you own, your risk side of the equation goes up. If you are new to CX; IMHO hold off any home purchase for a while.
What will happen to HK House prices? IMHO it depends on whether you are looking at the short, medium or long term?
· In the short term, prices will most likely come back a bit. Why? Well there is an element of fear out there as well as the fact people are probably carrying more debt than they should be which will slow things down a bit.
· In the medium to long term? Much harder to predict! If the USD continues to weaken (I disregard the recent USD strength) then HK property would start to look cheap to people buying using RMB or other foreign currencies. Of course, for expats this “price increase” would be nurtured by the loss in home country exchange rates. If the HK Govt decided to depeg , repeg or abandon the HKD, then prices could do anything! A rapid increase due to speculation or a rapid decline due to perceived over valuation! If I knew the answer to this I wouldn’t be flying buses for a living!
404:
· No depression? Not yet! Recession? Most definitely and for quite a while already! Surely you do not believe the Government Statistics? Check out http://www.shadowstats.com/ for a more realistic picture. It should be obvious that it is not in the interest of any government to paint a bad picture of their economy. The CPI and unemployment numbers are the easiest to manipulate. Other figures like M3 have been abandoned by the US government! What is M3? M3 is a stat that shows how much money is being printed! Surely, that isn’t important to know! Riiiiiiiiiight!!!!! For those who think the problems are over, consider this:
· The sub-prime crisis was an estimated $5 Trillion problem and it has caused the current mess. Just wait for the derivative market to bomb! That is a $600 Trillion dollar market with potential loses of almost $60 Trillion dollars! What is happening now will seem like a holiday if/when that happens!
· The US Government’s $700 Billion dollar bail out is a perverse blank cheque to failed businesses and will result in significant inflation. NB: Inflation is the increase in the money supply not how much your burger costs! Deflation is a contraction in the money supply which is impossible in the current environment! The current bail out will not be the last, but each effort to protect the various failures will only make things worse!
Sincere best wishes to all!