To an individual residential self-use property owners, the risk of being compelled to sell their property at loss is liquidity risk where bank demands further payment of security under the Mortgage. Given persistently low interest rate, such risk is low.
First, as long as rental income covers burden of monthly loan repayment in full, owners are well safeguarded from default.
Secondly, bank demands for further security based on the loan to valuation ratio (LTV). Lower LTV, lower possibility (risk). (i.e. the suggested valuation of the property under the Valuation Report need to be lower more 90% vs 50%).
Individual owners may maintain sufficient cash/cash equivalent for avoidance liquidity risk.
Thinking of the ideas relating to Dr. Tong’s forthcoming article “愛在深秋”, I would like to share views (regarding residential estates only) below:-
1. Location:
(+) HK island & KLN areas with development concepts e.g. 港島西沿線，觀塘沿線.
(-) NT without MTR access.
2. Size:
(+) in view of the latest Gov’s housing policy, medium bigger size (up from (3房1套)) in HK island and KLN
(-) old small property in NT
3. Scale:
(+) high liquidity, leading estate in the district
(-) low liquidity, single building
P.S:(a) above elements are considered as a while instead of separately; (b) referring the areas of KLN according to the legal definition whereby TKO, Kowloon Bay, Meifoo do not fall within KLN area.
Another interesting idea, a CPA friend of mine happened to tell me one of his approaches to pick property is based on the depreciation of the estate whereby he prefers new development. I am of different view as new developments nowadays are sold at maximum premium. Unless the market goes up dramatically after sale (like Hermitage, Latitude, Peak One), the secondary market sold at considerable profit is very unlikely (like Palazzo, Celestial Heights).
Looking forward to Dr. Tong's forthcoming article.
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