It’s that time of year again. Time to get contemplative about the last year. Bloomberg recently posted this: 2017 – The Year in Money. Below is a capture from the real estate section.
Here you can see the run up to the 1997 Asian financial crisis and also the Hong Kong “handover”. Initially, I thought the uncertainty of the handover would have reduced demand, but I guess there were other factors.
According to the book Hong Kong 20 Years after the Handover, the property and stock markets at the time were being fuelled by high inflation and low interest rates. This made real interest rates negative and created a strong incentive to borrow and invest.
I love seeing longer range indices because it helps to put things into perspective. If you started your career in real estate in Hong Kong around 2003-2004, you might think that prices generally always go up.
But consider how long it may have taken to get back to where you were if you had instead bought at the peak of 1997-1998.