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The Risk Of Property Bubbles In Hong Kong And Singapore: Another Aftershock Crisis Of The Global Financial Tsunami?

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  • PAUL S. L. YIP

    (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332, Singapore)

Abstract

This paper first provides a brief review of the global financial tsunami. It then explains why the quantitative easing in the US and the unique characteristics of the Asian property markets have contributed to the formation of property bubbles in some Asian economies. Thereafter, it discusses the possibility of a bursting of property bubbles in Hong Kong, Singapore or another Asian economy a few years from now, and highlights that the bursting of the property bubble in that economy could trigger severe corrections of property prices in this region through the contagion effect. After pointing out that the implied crisis could be more severe than that during the Asian Financial Crisis, it (i) discusses policies that could mitigate the damages of the potential crisis and (ii) draws important lessons and conclusions that could pre-empt similar disasters in the future.

Suggested Citation

  • Paul S. L. Yip, 2014. "The Risk Of Property Bubbles In Hong Kong And Singapore: Another Aftershock Crisis Of The Global Financial Tsunami?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 59(03), pages 1-53.
    • Handle: RePEc:wsi:serxxx:v:59:y:2014:i:03:n:s021759081450026x
    DOI: 10.1142/S021759081450026X
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    References listed on IDEAS

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    1. Nathalie Girouard & Mike Kennedy & Paul van den Noord & Christophe André, 2006. "Recent House Price Developments: The Role of Fundamentals," OECD Economics Department Working Papers 475, OECD Publishing.
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    More about this item

    Keywords

    Asset bubble; crisis; bubble squeezing strategy; property market; expectation of asset inflation; changes in economic behaviors; quantitative easing; Hong Kong; Singapore; JEL Classifications: D43; JEL Classifications: E32; JEL Classifications: E44; JEL Classifications: E52;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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