Showing posts with the label SCMP

Hong Kong Property "not overvalued" writes Tom Holland of the SCMP

Tom Holland piece in his SCMP Monitor Column dated August 27, 2012 has commented on the question many are asking. Is Hong Kong property overvalued? He writes:
As Hong Kong property prices set new highs, fears continue to mount that the market is a momentum-driven bubble in imminent danger of bursting.

Yet, although some softening of prices is possible given the weakness of the global trade cycle and the mainland's slowing growth rate, this column has long argued that there is little threat of a 1997-style crash any time soon. The reason is simple: although prices have gained dramatically over the last few years, there is no sign that the current boom - unlike the one in 1997 - has been propelled by a rapid increase in leverage.

If you doubt that - and many readers do - here is a little more evidence. The second chart shows the growth in value of outstanding mortgages plotted against the nominal growth rate of Hong Kong's economy.

In the run-up to 1997, the rise in mortgage lending…