財務策劃會議 各界翹楚獻策

載於信報2017年9月28日

筆者早前獲邀參與財務策劃會議論論壇，與各位財金官員及金融業翹楚擔任演講嘉賓。
施永青先生跟筆者均認為現時香港的樓價已經偏高，並非合適入市之時機，鑑於香港仍擁有太多存款，樓價因此未能下跌。

同時筆者亦在論壇表示若美國縮表及加息步伐加快，將成為明年推動樓市下跌其中一個主因。

Time to Duck when celebs Quack?

It appears that the Hong Kong property market is reaching a fever pitch of late, with a string of news on record high prices being achieved. However, there is an ‘entertaining’ twist to this phenomenon, in that more and more entertainers (ie movie stars, singers) are reported to be buying properties – indeed, year to date this group of buyers have acquired over HK$1bn worth of bricks and mortar, involving over 44,000 square feet of space (Table 1):

Table 1: property purchases by celebrities in 2017

Source: media reports

One should not simply draw conclusions about any significant trends just because a particular group of people are behaving en masse. However, one should surely delve deeper when any phenomenon starts to exhibit extreme patterns – this article looks into the extraordinary symptom of celebrity purchases to aid readers in their own property decisions.

Celebs often seen buying when markets are hottest

Whether or not the property market is overvalued or a good buy depends on how far from longer term trends the price is at any point in time. In this article the author uses Centaline index versus its 3-year moving average as an indicator of over/under valuation (see red area in Chart 1, for more immediate price action, the red line works well too). And to quantify the frequency of celebrities’ property purchases, a simple and reliable indicator might be the search frequency of the keywords ‘celebrities’ and ‘home buying’ in Google Trends (blue line in Chart 1).

Chart 1: Frequent purchases by celebrities presage home price correction ahead

One could identify from the chart above these interesting patterns:

1.      The purchase frequency of celebrities coincides with the cycle of property prices closely (it is a shame that one cannot observe the relationship back to the previous market top in 1997, as Google Trends data does not go beyond 2004)

2.      Whenever the purchase frequency of artists reached a peak, home prices would soften or even fall a year later (red line in Chart 1)

For example, in the lead up to the market top just prior to the Lehman bankruptcy, the buying frequency reached a high of 76%. This was followed shortly by the Global Financial Crisis and a 20% fall in home prices one year later. On the other hand, during the period of weak market sentiment in mid-2016 when the buying-frequency fell to a low of 42%, home prices spiked a handsome 22% in the 12 months that followed!

It pays to shadow the actions of tycoons?

Another group of market participants, also active in the Hong Kong property market, are the super-rich tycoons (represented by the blue line in Chart 2); they seem to have diametrically opposite track records compared to the artists – perhaps the tycoons have more information at their finger-tips, or because they act on purely profit motive (rather than to follow the heart), they seem to have a highly profitable outcome in their dealings:

Chart 2: Tycoon sales seem to be followed by drops in home prices a year later

It is possible to identify two sets of patterns from the above chart:

1.      Fluctuations of tycoon property sales also coincide closely with the home price cycle;

2.      Home prices tended to correct or fall when more tycoons dispose of their properties (red line in Chart 2)

As an illustration, at the same time the celebs (i.e artists) were buying big time in 2008, the frequency of disposals by tycoons was also at its highest (when the reading reached a maximum of 100% in the series). Then in early 2016, when tycoon sale frequency fell to a low of 45%, home prices increased smartly in the year that followed. Crucially important for readers to note is the fact that the tycoon sale frequency has surged to 98% in recent months once again…

Subdivide-and-dump and hiving-off work well for tycoons too

Tycoons likely hold large portfolios of assets, if not listed companies holding the same in addition. They may therefore be able to lighten up their portfolios through other means than straight sales – subdividing larger properties into small units for sale, or listing on the stock exchange richly valued vehicles from their holding companies – come to mind.

If one is to search for a different set of terms on Google Trends, such as ‘hiving off’ + ‘properties’ (Chart 3 below, note the Chinese search terms used have a dual meaning of subdivision and spin-offs), one arrives at the same price reaction as the ‘tycoon’ + ‘sell properties’ terms analysed above. Putting the two sets of search combinations together, they indeed exhibit almost identical profile (see Chart 4).

Chart 3: Tycoons hiving off their assets also bode ill for property prices

Chart 4: Tycoons selling have near identical timing as artists/celebs buying

If the magnitude of change in home prices follows the red arrow in Chart 3, there is significant risk to the sustainability of housing market in the months ahead. Readers should exercise even more caution when considering buying homes.

Conclusion: Don’t buy from tycoons, and don’t scramble alongside artists

The above analysis yields three sets of conclusions:

1.      When big property companies increase their pace of disposals, especially subdividing or selling ever smaller units, it is often also the time when celebrities in the entertainment circles scramble to buy properties;

2.      The above phenomenon is a strong signal that the property market may be about to weaken, even collapse;

3.      Celebrities in the entertainment industry have hectic lives, and could be also more prone to acting on impulse than analysis. They could increase their chances of investment success if they employ the skills of seasoned professional advisors, both in the timing and execution of their purchases/sales, and in the ongoing management of the properties they hold. To stand better chances against the buy-high-sell-low symptom outlined above, our artists should avoid being swept off their feet by hot market sentiments, or by the sweet-talking from property agents.

The author would like to express gratitude to Mr Yeung LI of The Chinese University of Hong Kong for his contribution in the writing of this article.