The basings fiasco
Join Date: Feb 2009
Location: UK
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.......and only if the price goes up and interest rates stay low. It's only a "perk" when you've sold and hopefully made a profit. Some guys have got they're fingers burnt in the past. The debt is in your name after all and as Harbour Dweller says, finding 30% deposit for a decent sized family home is probably out of reach for most of us.
Once the company has finished attacking the housing policy, then there's no real point in staying in HK. It's a race to the bottom in this industry I'm afraid and CX is playing catch up.
Once the company has finished attacking the housing policy, then there's no real point in staying in HK. It's a race to the bottom in this industry I'm afraid and CX is playing catch up.
Join Date: May 2006
Location: Hong Kong
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Sir KDM,
I take your point about the 30% deposit, but if your flat is paid off over time, you are always in profit regardless of whether the price has gone up or down. The up and down just determines the level of profit, not whether there is one or not. The alternative would be to keep the flat and let it out to give you retirement income. Admittedly it may take up to 15 years to pay off a large mortgage, but it takes even longer to build up a decent pension fund.
I take your point about the 30% deposit, but if your flat is paid off over time, you are always in profit regardless of whether the price has gone up or down. The up and down just determines the level of profit, not whether there is one or not. The alternative would be to keep the flat and let it out to give you retirement income. Admittedly it may take up to 15 years to pay off a large mortgage, but it takes even longer to build up a decent pension fund.
gjanf
These are back of my beer coaster numbers but it is possible to walk away from owning property in HK even with the company paying it off and lose money. There are some guys around that are still behind from the Asian economic crisis in 1997. Let’s assume you buy a place for HK$7.8M with an average annual interest rate of 3.5% over a term of 15 years. Total interest will be about HK$2.4M and tax will be about HK$1.7M. This leaves a total profit with no capital gains of HK$3.7M. After stamp duty, property taxes, management fees etc, you would only need to have the property market decline about 40% if you bought at the wrong part of the cycle and you are stuffed. It’s happened before and it will happen again.
These are back of my beer coaster numbers but it is possible to walk away from owning property in HK even with the company paying it off and lose money. There are some guys around that are still behind from the Asian economic crisis in 1997. Let’s assume you buy a place for HK$7.8M with an average annual interest rate of 3.5% over a term of 15 years. Total interest will be about HK$2.4M and tax will be about HK$1.7M. This leaves a total profit with no capital gains of HK$3.7M. After stamp duty, property taxes, management fees etc, you would only need to have the property market decline about 40% if you bought at the wrong part of the cycle and you are stuffed. It’s happened before and it will happen again.
