Rise in housing prices renews debate on affordability

Housing affordability is back in focus as property prices in the city show signs of picking up.

According to BNP Paribas, indicators of housing affordability are stretched as household incomes have risen at a much slower pace than home prices.

The price-income ratio, which the investment bank defines as the average price of a typical 50 sq metre flat to the median income of households in private housing, is about 14 - the level last seen before the onset of the Asian financial crisis.

Some analysts say this measure does not reflect the wealth in the market. They believe affordability may not be a key factor driving home prices, which is more often caused by the imbalance between demand and supply.

Prices of second-hand homes have risen 1.78 per cent so far this year. They are now 2 per cent below the market's record high in March last year but still 3.42 per cent higher than the intrayear low in March this year.

BNP Paribas said in its research report prices had been "flat to down" over the past 12 months because of the cooling measures introduced by the government in October 2012.