Are House Prices Rising Too Fast in Hong Kong SAR?

20 Pages Posted: 1 Feb 2011

See all articles by Ashvin Ahuja

Ashvin Ahuja

International Monetary Fund (IMF)

Nathan Porter

International Monetary Fund (IMF)

Date Written: December 2010

Abstract

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.

Suggested Citation

Ahuja, Ashvin and Porter, Nathaniel John, Are House Prices Rising Too Fast in Hong Kong SAR? (December 2010). IMF Working Papers, Vol. , pp. 1-19, 2010. Available at SSRN: https://ssrn.com/abstract=1751385

Ashvin Ahuja

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Nathaniel John Porter (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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