Housing Prices Soar in Hong Kong
Hong Kong real estate rates have risen by more than 50 percent since 2009 due to high demand and constricted supply. The Economist reports that the government in Hong Kong has a monopoly on land and the amount of land it auctions off determines in part, the level of new construction. Home completions in the 1990s averaged 23,000/year. In recent years, that figure is in the range of 10,000 to 11,000/year.
Office rents in Hong Kong are at $160/sf and new home prices are 55 percent above London rates. Vacancy rates are around 4 percent. The Economist’s quarterly home-price index compares prices in 21 economies. The March index placed Hong Kong property at 58% above “fair value” (defined as the long-run average ratio of prices to rents and incomes) making Hong Kong second only to Singapore as the most overvalued property market in the index.
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