Hong Kong building bubble risk is bound to Asia

Hong Kong property market bubble risk hanging. UBS Wealth Management Investment Director’s Office published “2017 UBS Global Real Estate Bubble Index” report, the world’s 20 selected cities which, Hong Kong is the world’s financial center in the most difficult to bear the property prices, the housing market bubble risk more ranked Asia First, the macroeconomic situation, investor sentiment and other changes, as well as increased supply and so can trigger the bubble blasting.

Global Real Estate Bubble Index

Fine unit price increase of more than 20%

In the global, the top three real estate bubble risk is Toronto, Canada, Stockholm and Munich, Germany, the bubble index reached 2.12,2.01 and 1.92 respectively. Hong Kong has an index of 1.74, which is the same as the “bubble risk” sector. Hong Kong ranks seventh in the world, but is crowned in Asia and 0.9 from the second Tokyo in Asia and the third Bit of 0.32 in Singapore.

Hong Kong’s real estate bubble risk rose last year, and in the global financial center among the most difficult to bear the property, the average living area of ​​only 150 square feet per person. The report pointed out that Hong Kong’s small unit prices in the past four quarters rose more than two percent, so that residential property prices rose to a record high this year. Excluding inflation, property prices have risen nearly three times as low as the three-year low, representing an average annual increase of 10%. Over the same period, rents have increased by almost 3%, but household income has not risen.

In the atmosphere of “shocking to buy more and more expensive”, the public expect property prices to rise again, so they tend to “block” and the secondary market is frozen. Claudio Saputelli, the global real estate executive who wrote the report, said that Hong Kong’s investment demand has not weakened, coupled with strong optimism, making property prices short-term difficult to cut. But the market is highly dependent on the investment climate, coupled with government policy or further tightening, brought instability for the property market.

Deutsche Bank published a research report that real estate stocks over the past two months rose 8%, outperforming the Hang Seng Index 6% increase, indicating that the market policy policy next month, looking forward to too much. The “Hong Kong people’s first board” scheme, which is launched by the City Council, should be set at $ 5 to $ 7.5 million depending on the HOS flats with a target of $ 52,000 to $ 72,000. Deutsche Bank believes that this is the most easy for developers to sell residential products overlap, developers such as participation in the program, the “ditch light” own sales gross margin.

The market is too much looking forward to real estate policy

In addition, the market is too much hope to speed up the conversion of agricultural land for residential use. De Silver said that if the current annual sales and the average residential unit area, the developer held by the agricultural land can be converted into the total supply of residential, enough 34 to 274 years of sales! Taking into account the pressure on property prices and gross margins, developers may not actively apply for farmland conversion.