Kiasu-Victim-of-the-Month Award goes to 30-year-old banker Foster Lee, who, after watching property prices rise for four years, has chosen this time to buy an apartment in West Kowloon (presumably The Austin, at around HK$19,000 a square foot). “You see that people who earn less than you have caught up with you because they bought then,” he told Reuters. It is classic ‘afraid to lose’ thinking – and of course investor psychology at its most emotional and thus illogical.
He adds: “It’s like a girl you liked got married.” Except it’s not. He didn’t lose anything to anyone by not buying earlier; it’s just that other people got something he didn’t get. But that’s how kiasu works: others’ gains seem to be pretty much at your expense. (In Singapore and Malaysia, where the study of this attitude is highly developed, it is common for people to note the licence-plate numbers of vehicles involved in accidents, to use the digits in the lottery. The idea is that now those numbers have delivered misfortune to another person, they will be luckier for you.)
‘Developers jack up prices’, screeches the Standard. Like many media moguls, owner Charles Ho shoe-shines the property tycoons and cartels, mainly out of caste loyalty, but also because his newspapers benefit from the big conglomerates’ advertising. The paper’s intention is to make you want to rush out and buy real estate now. Under the circumstances of a liquidity/supply-generated bubble with relatively little obvious upside to prices, you might think ‘Developers reduce prices’ would be a bigger lure, but as Foster shows us, it’s not. Weirdly, It would also be more accurate.
The real-estate companies are indeed slashing their prices, to the extent that their latest developments (which of course are nowhere near completion yet) undercut similar second-hand units in the same neighbourhoods. They are using rebates and offers to pay stamp duty in order to minimize the reduction on the price tag, but the bottom line is the buyer pays less and they make less.
The inevitable consequence is that the asking prices for second-hand places have to come down. The sellers, who we can be sure have some kiasu hang-ups of their own, will show intense reluctance to discount; a typical Hong Kong property owner or landlord would rather have six months’ of all-day root canal treatment than cut the price. When it starts, however, there is a chance they will all rush and panic-sell. That’s when the fun starts, and people throw themselves from windows, and the government will suddenly start worrying about having a stable and ‘healthy’ market (understandably, given that it includes people like Labour Secretary Matthew Cheung, who owns eight properties on Hong Kong Island.)
Maybe. There is a theory that Hong Kong has considerable pent-up demand, and a relatively mild correction – say, 25% – will clear the market. Another theory is that whatever happens, the US Dollar is going to shrivel away into nothing and the currency peg will condemn us to pushing cash around in wheelbarrows, and homes will be costing a billion bucks per square inch. Which should make Foster happy.