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Hong Kong property bubble tipping point yet to be reached: HKU professor

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Professor Chau Kwong-wing. Photo: David Wong

While the government has warned of a property bubble, a professor of real estate says a tipping point for it to burst has yet to be reached.

Professor Chau Kwong-wing, of the University of Hong Kong's department of real estate and construction, said a comparison between current rental returns and long-term bonds' interest rates showed property prices were unlikely to slump.

"According to past experiences, property prices slide when the rate of rental returns drops 3 to 4 percentage points below bond interest rates," Chau told a forum organised by Caritas on addressing middle-class housing problems yesterday.

Presently the rate of rental returns - just below 4 per cent - is still higher than long-term bonds with interest rates of less than 2 per cent, he said.

Ben Bernanke, chairman of the US Federal Reserve, has recently announced that future interest rate rises would be directly linked to the unemployment rate in the United States.

On his blog yesterday, Hong Kong Financial Secretary John Tsang Chun-wah wrote Bernanke's comment indicated a rate rise in the US was possible before 2015.

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