6 November 2009
Booming residential property values across much of Asia, have added to growing concerns that property bubbles are forming, reports the Financial Times.
Given that property values in most Asian countries were falling not so long ago, there are mounting concerns that the many real estate markets are heading for another crash, which would delay the long-term economic recovery.
The price of luxury properties in Hong Kong, for example, are now 30% above their low point in the fourth quarter of 2008, with prices up 14% just between Q2 and Q3 of this year across some parts of the city.
The price of residential property in Singapore has also surged, up 15.8% in Q3, compared to the previous quarter.
China property values are now up 37% year-on-year.
Some experts have played down any concerns over a potential real estate bubble.
Matt Nacard, Tuck Yin Soong and Eva Lee, property analysts at Macquarie Research, believe that price growth is likely to slow significantly in 2010.
“Faced with few other investment options, investors have jumped into property as cash-filled banks have aggressively chased this relatively low-risk asset class,” they wrote in a report on the outlook for property stocks. “This phenomenon has been so strong it has enticed usually wary investors to invest earlier in the recovery cycle.”
Frederic Neumann, senior Asia economist at HSBC in Hong Kong, is calling on policymakers to raise interest rates in an attempt to curb residential demand.
See Also: Marc Da-Silva (269), Asia (1), Hong Kong (6), China (24), Singapore (7)
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