Property

Had a brief chat with JW. He was thinking of buying a new apartment for his parents and he asked for my opinion - from a financial point of view.

Somehow JW has a romantic idea that I am a wise man. It has certainly disappointed him this time - local banks announced an increase the interest rate of mortgage soon after I said it was a good idea to buy. To me the consideration is simple: buying property is almost always a good idea for real use, but never as an investment.

Yes, buying apartments for renting is the favorite kind of investment by many traditional Chinese tycoons and respectable investors (like Tony Measor), and many real wise men do make money by buying and selling. Nonetheless buying with mortgage - for the purpose of investment - is no different from gambling in the stock market by margin trading - except the fact that a flat is less liquid but more volatile. As the owner of a property, you have to take the risk of encountering malicious agent or tenant, and you cannot sell the stuff on any day by just a few clicks on the computer keyboard !

After all, if one has a good reason to invest in the property market, why don't we just put the money on the share of well-managed companies ?