THE latest Jones Lang Wootton quarterly property index makes scary reading, with office prices up more than 40 per cent, office rents up 23 per cent, and luxury home prices up 26 per cent - all in just three months.
The pace of growth over the quarter has been startling even by Hong Kong standards, especially given the tighter mortgage lending restrictions imposed in January by the big banks.
The question everyone is asking is when will the charging locomotive run out of steam.
Events over the past couple weeks suggest it could be sooner than previously expected.
While analysts doubt whether capital values and rentals have yet hit their peak, the pace of price increases is clearly unsustainable.
In the past few days there has been evidence of a fall-off in transaction volumes, as investors ponder the implications of rises in both domestic and international interest rates and the possible measures likely to be introduced by the Government this summer to cool property price growth.
Rising territory mortgage rates are of more immediate concern. If rates do rise by more than two percentage points by the end of this year, as some economists predict, negative real interest rates and some of the attraction of hedging money against inflation in real estate would disappear.
