Are House Prices Rising too Fast in Hong Kong SAR?
December 1, 2010
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Order a Print CopyDisclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary
Sharp increase in house prices in Hong Kong SAR in 2009-2010 has led to concerns of an emerging real estate bubble. According to our measure of price deviation from fundamentals, which should be taken as an early warning indicator of market exuberance, the current level of house prices in Hong Kong SAR does not seem to be significantly higher than would be justified by underlying fundamentals. Moreover, unlike advanced economies before 2007-8, deviation from fundamentals has not been persistent in Hong Kong.Going forward, low interest rate and improving growth prospects, as well as a tight supply, particularly in the mass market, means that house price growth will continue to be strong.This is the period in which vulnerability may be accumulating, and tight prudential standards and fiscal measures will be required to tame price inflation.
Subject: Asset prices, Financial services, Housing, Housing prices, Land prices, National accounts, Prices, Real interest rates
Keywords: Asset prices, benchmark price, financial stability, house price, Housing, Housing prices, Land prices, ownership cost, price, price growth, price misalignment, prudential measures, Real interest rates, WP
Pages:
19
Volume:
2010
DOI:
Issue:
273
Series:
Working Paper No. 2010/273
Stock No:
WPIEA2010273
ISBN:
9781455210800
ISSN:
1018-5941
