Low property prices and low returns still have investment value?

It is widely expected that there will be downward pressure on property prices in the second half of the year. However, the high rate of property prices in Hong Kong has led to a decline in the rental yield. Does the “brick” in Hong Kong still have investment value?

The investment value of a property depends mainly on the appreciation potential and rental return. According to the Information of the Rating and Valuation Department, from June 2016 to May 2019, the price index of local private property prices rose overall from 276.4 points to 396.8 points, and the cumulative appreciation of property prices in the three years was about 44%.

Hong Kong financial status

Secondly, the rental index for private buildings in Hong Kong also rose from 166.1 points to 194.9 points. The cumulative increase in three years was about 17%. As the increase in property prices was more rapid than the increase in rents, the rental yield was not improved. The rate is about 2.7%, while the luxury homes are about 2.1%.

Although the current rental rate is not as attractive as it is in 2016, the supply of land and housing in Hong Kong is still in short supply. Many people need to rent a flat. In terms of investment, rent return is an important line of defense and also better than others. The place has an advantage.

In addition, Hong Kong properties have long been welcomed by overseas buyers. It is also because Hong Kong has an international financial centre, an ideal business environment and a low interest rate environment.

As for other hot investment products, there are advantages and disadvantages, including low-risk annuity products, with a return rate of about 3%. However, there are many withdrawal restrictions and the annual life factor should be considered. Recently, the Hong Kong dollar deposits have been increased to about 2%. Levels, and even some blue-chip dividend-paying stocks, the return rate is attractive, but it is also more susceptible to fluctuations in peripheral economic and time-course factors, and the effect on wealth appreciation is relatively average.

However, in addition to considering the return and appreciation, before investing, you must also pay attention to the degree of risk and financial needs that you can bear, and measure your own risk of entering the market.