The two nastiest words for many Hong Kongers may well be "negative equity."
Just ask people like Linda Chu, a 63-year-old retired pharmacist. She paid HK$2.2 million (US$282,000) for a 72m2 apartment in 1998.
It's now worth just HK$1.3 million (US$167,000).
Property values that soared in the 1990s along with the city's spectacular skyline came crashing down during the Asian economic crisis and never recovered.
Hong Kong's housing costs still rank among the highest in the world. Yet many home-owners are being badly pinched, owing banks more than they can sell out for.
The government recently announced plans to boost the market, curtailing land sales for a year and saying it will make middle-class buyers ineligible to buy subsidized housing by 2003.
But analysts and worried mortgage holders say it remains unclear how much or how soon that will help.
"I won't expect much because our economy is still in a very bad shape," Chu said. "I think it will take at least four to five years before we could see any improvement."
A general view is that only economic recovery can rescue Hong Kong's battered real estate market. But recovery has proven elusive for the past few years as the territory limps along trying to reinvent itself with little real expansion.
Critics say part of the problem was Hong Kong's over-dependence on rising property prices to fuel growth -- making the subsequent slump all the more painful.
Hong Kong's plan to help the market -- criticized by some as a handout for rich developers -- may increase the number of transactions but might do little for prices, said Adrian Ng, head of regional property at BNP Paribas Peregrine.
"It will influence the buyers psychologically. Some people have more confidence," Ngan said. "In terms of prices it probably will remain soft, at least in the next six or 12 months, because of ample supply. The demand has been picking up, but it's still price sensitive."
Ngan predicted it will be 2005 before the government's measure has a real impact.
But Clifford Lam, head of property research at investment bank Merrill Lynch, has a somewhat brighter forecast this time around, based largely on an economy showing early signs of growth.
"What hasn't been there before is the economy recovering," Lam said. "Unemployment rates are going down and deflation seems to be easing as well. The economy seems to be rebounding."
The property market will probably never go "haywire" again as it did in the run-up to Hong Kong's handover from British to Chinese sovereignty in 1997, but "there's no reason it should be looking down," Lam said.
Despite some predictions of a rebound, many ordinary buyers remain gloomy. And, their lack of confidence can hinder the prospects of recovery as people who have money hoard rather than spend or invest.
"I think the prices will continue to fall in the next three years because the market is now overstocked," said 27-year-old computer engineer Quentin Leung.
He took out a HK$1.63 million (US$209,000) mortgage on a small apartment in 1999, but it's now valued at just HK$1.25 million (US$160,000).
"But I think owning a property is still a top priority for many Chinese. It's still a better investment than putting cash in banks."
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