Jake's View | Hong Kong’s property bubble is a long way from bursting
Mortgage rates, the most important factor in affordability, are still at unprecedented lows
If history is any guide, the long queues of property buyers seen at the Tsuen Wan residential project last weekend could be the harbinger of a bubble in the world’s most expensive housing market.
SCMP, June 3
And what if it is not?
I agree that it is a bubble we are looking at. It is the third one I have seen form in Hong Kong and it looks to me just like the ones I watched blow up and burst in 1981 and 1997, with the same long queues of speculators and the same bubble talk in all the media, including the unheeded warnings that it cannot last.
But what if this bubble is more like a football, and more durable than a shimmering, small globe of soap?
I ask the question because, as the chart shows, one thing is different from both 1981 and 1997. It is that the underlying cost of money, as best represented by the US 10-year treasury yield, has come steadily down since 1981 and still defies expectations that it will soon rise again.