Home Sales Hit A 13-month Low In Hong Kong....

The ridiculously expensive housing market in Hong Kong is in a slump and unit sales continue to slide.

The 7,100 residential units sold last month represented a fifth consecutive monthly decline since April, when 14,124 units were sold, Land Registry figures showed.

The 435 sale and purchase agreements in the primary market were the lowest since December 1997, according to Midland Realty chief analyst Buggle Lau.

The most amazing thing about these statistics aren't the numbers but the analyst's name; Buggle Lau. Wow, that is one for the odd naming book if I ever saw one. But I digress.

Of course the primary market is affected by the completion and sale of new projects or the mysterious process of 'release' of units for sale by developers where 'inside' transaction prices are not disseminated, making the whole primary market unit sale and prices received data nothing more than smelly garbage.

But their is one economic fact and that is that unit sales volume is falling. Declining sales unit volume is a pre-cursor to declining prices. Sellers try to get prevailing prices, but as buyers shy away, sellers hold prices firm. Eventually, a small percentage of sellers will need to sell or will be forced to liquidate and they will lower their asking prices till a market clearing price is reached. These lower prices are then recorded and we therefore, can expect to see actual reported price declines. If a property doesn't sell, then it price hasn't declined according to the way prices are recorded. But, a so-called expert in real-estate economics is quoted as saying...

However, falling home sales and rising rates have so far failed to dampen real estate prices, according to Eddie Hui, deputy director of Hong Kong Polytechnic's Research Center for Construction and Real Estate Economics. "With the improving economic conditions in Hong Kong, home prices are expected to rise steadily in the fourth quarter despite falling home sales," Hui said.

Home prices jumped as much as 10 percent to 15 percent in the first quarter this year, followed by a minor correction of 3 percent to 5 percent in the second quarter. They remained stable in the third quarter, according to Ricacorp Properties.

But I argue that the economic argument, that the Hong Kong economy is improving is something that has been widely anticipated and price rises already experienced have largely discounted this. So, I think that the argument on economic conditions is large a fallacy and only serves to push those suckers that want to believe that prices will continue to rise into the market place. Property buyers, here, are the Hong Kong equivalent of livestock on their way to slaughter. Consumers are penned up and directed to the Hong Kong real-estate abattoir by the Hong Kong uber-wealthy well-connected tycoons and their slobbering media slaves, who are most interested in parting hard earned cash from gullible Hong Kong consumers than to delivering good products at reasonable prices.