Are House Prices Rising Too Fast in Hong Kong SAR?

 
 
Publication Date: December 01, 2010
 
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Disclaimer: 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.
 
Series: Working Paper No. 10/273
Subject(s): Housing prices | Hong Kong SAR | China | Real estate prices | Price increases | Cross country analysis

 
English
Publication Date: December 01, 2010
ISBN/ISSN: 9781455210800 Format: Paper
Stock No: WPIEA2010273 Pages: 32
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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