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Are House Prices Rising too Fast in Hong Kong SAR?

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  • International Monetary Fund
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    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.

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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=24403
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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/273.

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    Length: 19
    Date of creation: 01 Dec 2010
    Date of revision:
    Handle: RePEc:imf:imfwpa:10/273

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    Related research

    Keywords: Housing prices; Hong Kong SAR; China; Real estate prices; Price increases; Cross country analysis; mortgage; real interest rates; inflation; mortgage interest; financial stability; price inflation; mortgages; home ownership; mortgage corporation; mortgage insurance; housing markets; mortgage interest rate; housing affordability; mortgage rate; mortgage interest rates; monetary policy; mortgage loan; price level; housing loan; mortgage default; provision of mortgage; housing construction; mortgage interest payment;

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