Real estate broker CB Richard Ellis Group Inc. believes that Hong Kong’s luxury home prices could rise 20% this year as the economy grows and supply of new homes remains low, reports Chia-Peck Wong for Bloomberg. The property market is being supported by a rising employment rate, low mortgage costs, near-zero interest rates and increased demand from mainland China.
However, the Hong Kong Central Bank warns of possible “sharp corrections” in asset prices if fund flows reverse. The government has taken measures to reduce fund flows like raising minimum down payment requirements and suspending mortgage insurance for rental properties in an attempt to stop a property bubble. [Is an asset bubble forming in Hong Kong?]
CBRE Group calculated that luxury home prices in Hong Kong surged 51% last year.
For more information on Hong Kong, visit our Hong Kong category.
- iShares MSCI Hong Kong Index (NYSEArca: EWH)