In recent year whenever there is TV interview on the property price hike, those interviewees whether the property agent or developer always put on a straight face, saying the material and land cost is much higher, that's why need to sell high, they have no choice.
Out of curiosity and also wonder how much more premium developers are earning compared to before property boom, i took a few property stocks which specialize in residential properties, to compare their last quarter margin to the year 2006 & 2005 before boom.
Here are the results.
Wing Tai
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Last Quarter 2006 2005
Gross Margin 59.19% 25.23% 28.87%
Net Margin 34.83% 15.26% 9.01%
All Green
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Last Quarter 2006 2005
Gross Margin 61.54% 32.07% 41.36%
Net Margin 46.89% 18.50% 24.42%
SC Global
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Last Quarter 2006 2005
Gross Margin 48.69% 28.11% 16.37%
Net Margin 31.76% 17.03% 10.81%
As you can see both their gross margin and net margin has been doubled if compared to year 2006. The median net profit margin of above 3 stocks is 38%, 21% higher compared to 17% in 2006.
Generally the developer now can earn $210k more for every $1m property they sold compared to year 2006. Even after factored in the rise in land cost and material cost, still allowing them to have a net margin of 38% compared to 17% in 2006.
Am i making right judgement? To say that we are overpaying $210k for every $1m worth of property on top of all their cost? If compare to 2006 more sensible pricing.
Out of curiosity and also wonder how much more premium developers are earning compared to before property boom, i took a few property stocks which specialize in residential properties, to compare their last quarter margin to the year 2006 & 2005 before boom.
Here are the results.
Wing Tai
--------
Last Quarter 2006 2005
Gross Margin 59.19% 25.23% 28.87%
Net Margin 34.83% 15.26% 9.01%
All Green
---------
Last Quarter 2006 2005
Gross Margin 61.54% 32.07% 41.36%
Net Margin 46.89% 18.50% 24.42%
SC Global
---------
Last Quarter 2006 2005
Gross Margin 48.69% 28.11% 16.37%
Net Margin 31.76% 17.03% 10.81%
As you can see both their gross margin and net margin has been doubled if compared to year 2006. The median net profit margin of above 3 stocks is 38%, 21% higher compared to 17% in 2006.
Generally the developer now can earn $210k more for every $1m property they sold compared to year 2006. Even after factored in the rise in land cost and material cost, still allowing them to have a net margin of 38% compared to 17% in 2006.
Am i making right judgement? To say that we are overpaying $210k for every $1m worth of property on top of all their cost? If compare to 2006 more sensible pricing.