Friday, May 27, 2011

Property crunch

People have been asking me what's up with the property market in Mui Wo.

Why are the real-estate agent websites all not updated? Is there a dearth of places for sale in the area?

And why are the available properties so expensive? Is Mui Wo becoming an expat area, with expat prices?

Never let it be said I don't listen to the needs of my readers. I did take a walk around town to check and, yes, there does seem to be fewer photos up in the windows than there'd been months before.

What is happening? Gleaning from gossip from the locals and realtors here's a possible scenario:
  • There are only a small number of homes in the area and the affordable ones (ie below HK$2 million) have already been snapped up.
  • Both new and existing homeowners are banking on prices to rise further so they prefer to hold and rent out their units rather than sell – unless it's for a ridiculous sum of money.
  • Going by the laws of demand and supply, this means sale prices are high but rents are still relatively low.

So people thinking of moving to Mui Wo should rent first and buy when the supply increases again, right?

Sort of. The problem is that rents are rising all over Hong Kong and that's pushing more people off the Island and into the New Territories.

Notice how crazy rents are in Lamma? Well, some Lammaites are decamping for Mui Wo and that is increasing the demand here too.

If you're thinking of buying in the area, the agents advise you take out a lease with an option to extend so your rents won't suddenly spike at the end of the year.

But let them know that you're looking and be prepared to act fast if something does come up. As you can see from the transaction figures, there are still affordable properties around.

Don't give up hope. Sooner or later, someone will put their home on the market. It just won't be us.

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