Opinion | Only way is up if you take the long-term view

Two weeks after the government announced new stamp duties in a bid to hose down overheated home prices, the talk of the town is still where prices are headed.

To try to come up with an answer to the burning question, analysts have put their predictive science, such as it is, to work. They have fed their financial models with data such as demand and supply, affordability, inflow of capital and interest rate movements and then hit the "execute" command on their computers.

A friend of mine scoffed at all of these approaches and came up with a blindingly obvious answer, so long as you are not thinking just six months ahead. Home prices in "world class cities" always rose in the long run, she said.

Her remark reminded me of the popular television show The Little Paris Kitchen featuring the presenter Rachel Khoo. The show features the pretty British-born chef at work in her tiny Parisian kitchen, bringing imaginative flair to the job of preparing delicious food and serving it up in her 21-square-metre flat in which she could fit just two guests.

The show cuts from her tiny flat to shots of the overcrowded property market in Paris, troubled, like in Hong Kong, by rising home prices and shortage of supply.

Indeed, neither Hong Kong nor Paris is alone in this respect. Just in September, international property consultant Savills released its latest World Class Cities Survey that showed prices rising in almost all of the 10 premier global residential property locations it monitored. On the list were Hong Kong, London, Tokyo, Singapore, Paris, Shanghai, New York, Sydney, Moscow and Mumbai.

While New York's June prices were still a little below pre-financial crisis levels at the end of 2007, Savills says prices in the city are going upwards. It found that average home values as captured in its World Class Cities Index, launched in August last year, have risen by 77 per cent from December 2005 to June last year, despite the intervening financial crisis.