Property prices in Hong Kong housing hit a 12-year high in Q1 of this year after increasing 7.5% from the end of 2009. According to a housing index compiled by Centaline Property Agency the surge was due to a combination of low interest rates, limited supply and growing confidence in Hong Kong’s economic recovery.
Mr Wang Tao, head of China economic research for UBS, said China shares characteristics with Japan’s real estate boom of the 1970s, when the nation quickly recovered from a slump. The Chinese economy will be able to keep expanding even in the event of a property contraction.
SteelGuru adds, according to the paper co-written by four BOJ economists, economic growth of almost 10%, surging incomes and a rapid flow of people into cities spurred demand for housing and boosted property prices in Japan in the 1970s, similar to China today.