It should not be overlooked that the Hong Kong property market has historically behaved based on sentiment as much as on logic and pragmatism. In this way, it sometimes behaves like more traditionally liquid markets such as equities. This provides short term risk as well as reward.

It is also possible that Bird Flu could erupt and affect the property market as SARS did. However the lessons learned by those responsible for hygiene during the SARS scare (in which less people died during the entire epidemic than die in Europe from the Flu every day) are likely to prevent such an outbreak from occurring, so the risk is generally considered extremely small.

Whilst we believe that the negative real mortgage rates which have occurred as a direct result of the Sup-Prime crisis in the US, the longer term fallout from this is not known in Hong Kong. There is general agreement that some additional effect will be felt but that this will be moderate due to the local and surrounding booming economies in Asia.

With many investment banks reporting huge losses as a result of the Sub-prime crisis and credit crunch, it is conceivable that the credit crunch will be passed onto other banks and that this may affect available gearing ratios negatively.