Real Estate: IMF Sounds The Alarm On The Hong Kong Housing Bubble (PART 1)

Real Estate: IMF Sounds The Alarm On The Hong Kong Housing Bubble (PART 1)

Agence France Presse | Dec. 12, 2012, 11:06 AM | 972 | 4
Hong Kong DO NOT REUSE

Philippe Lopez/AFP/File

High-rise residential buildings in Hong Kong. The International Monetary Fund has warned that Hong Kong could see an abrupt fall in property prices after years of dramatic increases in one of the world’s most expensive housing markets. Home prices in the Asian financial hub have skyrocketed 90 percent since 2009.

The International Monetary Fund has warned that Hong Kong could see an abrupt fall in property prices after years of dramatic increases in one of the world’s most expensive housing markets.

Home prices in the Asian financial hub have skyrocketed 90 percent since 2009 due to an influx of wealthy mainland Chinese buyers, pushing home-ownership beyond the reach of many of its seven million people.

“The sharp run-up in house prices raises the risk of an abrupt correction,” the IMF said in its annual review of Hong Kong’s economy.

“A sharp price correction would lead to falling collateral values and negative wealth effects, which could trigger an adverse feedback loop between economy activity, bank lending, and the property market.

“The property sector is the main source of domestic economic risk,” the Washington-based organization said.

It however said the chances of a price correction that is large enough to generate a major macroeconomic and financial consequences is “fairly low in the near term”.

It also said the city’s government recent bid to slap new taxes on residential properties “should help dampen housing demand” but urged Hong Kong to ensure sufficient supply in order to boost home affordability.

Hong Kong announced a 15-percent stamp duty on non-permanent residents and corporate buyers as well as a higher stamp duty on the resale of property within three years in late October in an attempt to rein in soaring prices.

With the global economic weakness continuing to impact domestic economy, the IMF said it expects Hong Kong’s economy to grow 1.25 percent this year, before rebounding to 3 percent next year.

Hong Kong leader Leung Chun-ying had warned last week that the city needed to boost its housing supply and create more living space or risked losing its “best and the brightest” talents.

Copyright (2012) AFP. All rights reserved.

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COMMENT:
Follow the money…
Intriguing story on many fronts….and this may go all the way back to the Opium Wars.  After the British and their bosses, the  Sassoon family, had gotten the Chinese addicted to Opium, and the Opium wars,…the British ended up with a long term lease for Hong Kong that run up till 1997 .   One has to wonder ….why bother ? …unless there was some underlying agenda .
NOTE: are we also seeing a thread here in history….specific strategies to control a given nation…in this case Opium.
I am coming to the conclusion that what we are seeing unfold is a plan hatched long long ago.
Hong Kong became a very powerful city in the world, a major financial center, below is some history .

Hong Kong

QUOTE:

Hong Kong’s population recovered quickly as a wave of migrants from China arrived for refuge from the ongoing Chinese Civil War. When the PRC was proclaimed in 1949, more migrants fled to Hong Kong for fear of persecution by the Communist Party.[67] Many corporations in Shanghai and Guangzhou shifted their operations to Hong Kong.[67]

In the 1950s Hong Kong’s rapid industrialization was driven by textile exports and other expanded manufacturing industries. As the population grew and labour costs remained low, living standards rose steadily.[73] The construction of Shek Kip Mei Estate in 1953 followed a massive slum fire, and marked the beginning of the public housing estate programme designed to cope with the huge influx of immigrants. Trade in Hong Kong accelerated even further when Shenzhen, immediately north of Hong Kong, became a special economic zone of the PRC, and Hong Kong was established as the main source of foreign investment in China.[74] The manufacturing competitiveness gradually declined in Hong Kong due to the development of the manufacturing industry in southern China beginning in the early 1980s. By contrast, the service industry in Hong Kong experienced high rates of growth in the 1980s and 1990s after absorbing workers released from the manufacturing industry.[75]

A sky view of Hong Kong Island

Development of Hong Kong Island in 1986

Throughout the British colonial era, Hong Kong was industrialized and developed in all aspects from its economy to its health care system. Many health facilities were built for its citizens, such as the Queen Elizabeth Hospital, Hong Kong, the Queen Mary Hospital, Hong Kong, the Princess Margaret Hospital, Hong Kong and the Prince of Wales Hospital. In 1983, when the United Kingdom reclassified Hong Kong from a British crown colony to a dependent territory, the governments of the United Kingdom and China were already discussing the issue of Hong Kong’s sovereignty due to the impending expiration (within two decades) of the lease of the New Territories. In 1984 the Sino-British Joint Declaration – an agreement to transfer sovereignty to the People’s Republic of China in 1997 – was signed.[67] It stipulated that Hong Kong would be governed as a special administrative region, retaining its laws and a high degree of autonomy for at least 50 years after the transfer. The Hong Kong Basic Law, which is based on the English law would serve as the constitutional document after the transfer, was ratified in 1990.[67]

COMMENT:
Given what I stated in a previous post, IMHO….the Cold War was an artificial construct aka all Bullshit. The first half of the 20th Century had (2) World Wars and millions of lives were lost. However the “vested interests” had accomplished many goals. In essence the World had evolved from wars between  smaller interests to what could be described as the roots of the New World Order. Countries chose sides…. “allied”……ie the so called Free World versus the Communist world. Duly note that Russia had the Bolshevik Revolution in the early 1900’s and a Communist state was created . This same state was, ironically ,  allied with the U.S and Britain in WW2.  So…WTF is with that …..ally with natural enemy ? Something smell here ?
Let’s think outside the box. This may be  a plan that goes all the way back to the French Revolution. We have been under this illusion delusion.  The aim was to make the world Communistic….a One World Gov’t . and we are creeping in that exact direction.  Wait…..Private Sector..Capitalism still exists? To some degree, but a sign of its health is the size of the middle class. Wealth and power is rapidly being funneled into the hands of the an Elite few. There is NO real difference between Communism and the Super Rich, they are flip sides of the very SAME  coin.
Recall how Communism even developed….it was funded  by wealthy Wall Street Bankers. 
It is meant to take out any competition and/or resistance aka create a controlled monopoly .
Communism is “X” country/s  DOWN…the rest of the world to go.
Its no different than a wrestling match…Good Guys and the Bad Guys…but nothing worse than realize they are all on the same side…to fool the masses.
Is this starting to make sense ?
( To be Continued )
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