Analyzing Hong Kong’s Massive Real Estate Bubble, and Why it Won’t Be Slowing down Anytime Soon
Without a doubt, experts have cited Hong Kong as the region where the subsequent real estate implosion could be happening. This is according to a recent study that was carried out by UBS.
As a matter of fact, the Global Real Estate Bubble Index has noted that homes located in the territory of Hong Kong are the world’s most overhauled, and face the imminent danger of collapse.
Fortunately for American homeowners, UBS believes that there are no major cities in America that are at risk of a bubble risk anytime soon. Nevertheless, it did cite the likes of New York, Los Angeles, and San Francisco recording some serious imbalances.
That being said, the only major metropolitan area in the United States that was cited as undervalued was Chicago.
The same cannot be said for homeowners residing in Vancouver, Toronto, and Munich. In fact, UBS has pointed out that the bubble risk in the aforementioned cities is almost at the same level as that of Hong Kong.
Hong Kong’s Massive Bubble
Interestingly, citizens in Hong Kong have to labor for almost 22 years to be able to afford a 650 square home!
Additionally, the likes of London and Amsterdam are also in the red zone of facing a bubble.
Globally, the statistics don’t lie. The price of housing has increased by an average of 35% in major cities, in the past 5 years alone!
That’s not all. In some areas, the situation has become a runaway train of hope and despair. One place worth mentioning is San Francisco.
As a matter of fact, the price of houses in the city has increased by an average of 80% in only 6 years!
One of the reasons for this could be that of all US Cities, San Francisco inhabitants have the largest income growth. This increase in affordability could be one of the reasons why the ownership and rental markets in the area are spiraling out of control.
Dissecting the Expensive Hong Kong Market
It’s no surprise that Hong Kong is top of the list. Its market shows no signs of cooling down anytime soon.
As a matter of fact, the city’s housing prices have climbed by a whopping 11 percent this year alone. It seems that the skeptics who had waited patiently for the bubble to burst are running out of ideas. Additionally, government efforts to minimize the cost of housing seem to be bearing little to no fruit.
If anything, it appears the bubble frenzy is spiraling out of control. What could be at play behind Hong Kong’s surging prices in housing?
The demand for Housing in Hong Kong Outstrips the Supply
The stats themselves show the current situation in the city. There is an average of 20,000 new residential suits coming up every year into the market.
These are barely enough to cater to the nearly 20,000 individuals coming from the Chinese mainland and settling as permanent residents in the region.
It’s Easy to Come by Money in the Region
Interestingly, the cash-loaded developers are doing all they can in their power to entice buyers to purchase houses in the Hong Kong region.
One good example is Sun Hung Kai properties with the Cullinan West Project that it has. It is going as far as offering potential buyers as much as 120 percent as a finance option. That is, enabling an individual to put 30 percent as a down payment on the current mortgage that they have, with the remaining 90 percent being directed towards the new housing project that they plan to purchase.
With such a strategy, the company is able to record a whopping 95 percent sales success in just one weekend!
Mortgages Are Cheap to Come by in the Region
Despite the prospect of rising interest rates in mortgages, it appears the raging war between rival lenders and banks is proving beneficial to potential homeowners.
As a matter of fact, HSBC Holdings offered low rates for some of its mortgage packages in a bid to match those of its competitors,
Additionally, one of Hong Kong’s biggest mortgage lender, was offering some of its clients rates as low as Hibor with 1.28 percent if they were getting a similar term from their rival banks. This translates to lower than 2 percent!
More in Loans & Mortgages
Home Insurance Mistakes That Can Seriously Cost You
One of the biggest monthly expenses that comes with buying a house is homeowners insurance which keeps us under the protective...November 7, 2018
Tried and Tested Career Tricks to Achieve Success
Success is defined by Merriam-Webster as “the fact of getting or achieving wealth, respect, or fame.” However, some of the most...November 7, 2018
IBM Acquired Red Hat For $34 Billion, Founder Refused to Take Credit For it
Who would have thought that this ordinary open-source software distributor would become a billion dollar company after being acquired by one...November 7, 2018
Las Vegas 2.0:The Chinese Megacity of Macau that Makes Las Vegas Look Small
Do you know the wealthiest place in the world? If you were thinking ‘Las Vegas’ then you’re close, but not quite....November 7, 2018
Effective Tips for Dealing With Disappointments in Your Career
It is inevitable to feel disappointed at some point in your career. Didn’t get the deal you have worked on for...November 7, 2018
Tesla Announces $6-Billion Investment Plan For Next Two Years
Car manufacturer Tesla wasted no time in announcing an increase in the production and development of new vehicles. Moreover, the company...November 5, 2018
This Company Received $375 Million to Have Robots Make More Pizzas
Everywhere you go around the world, you will find tons of pizza places. In some countries, they even have their own...November 5, 2018
Remodeling With a Credit Card May Not be Such a Good Idea — Here’s Why
Getting your house remodeled could be a good and a bad thing. It is of course good since that means you...November 5, 2018
Important Things You Must Know Before Getting a Pet Insurance
Feeling down, blue, or just bored? Animals have always found a way to cheer us up. They are like friends who...November 2, 2018