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
Hacks That Will Help Reduce Your Gym Membership Expenses
Do Not Pay The Requisite Initiation Fee Automatically Tom Holland who was once a gym owner and also the author of...January 15, 2019
SpaceX Announces Plans To Trim Its Workforce By 10 Percent
A spokeswoman of SpaceX recently told a media outlet that the company has plans to trim its workforce. The company which...January 14, 2019
This Is What Your Health Insurance Provider May Not Be Telling You
Some people know exactly how important it is to have health insurance, but there are still millions of people in the...January 14, 2019
Uber’s IPO Filing Will Affect Their Drivers And Consumers Badly
For decades now, taking a taxi or carpooling on your way to work, school, or literally in every anywhere you wish...January 14, 2019
Here’s Why Envisioning Retirement is a Good Idea
Aging is part of being human, it is just absolutely inevitable. This is actually one of the most important things that...January 14, 2019
Couple Makes $2,000 From Paying Mortgage With Their Credit Cards
Couple’s wise mortgage strategy An ordinary card owner may not be as brave as this couple, because they got the opportunity...January 14, 2019
Medicare Is Offically Letting People Have A Do-Over Until March
Healthcare has got to be the most important thing that everyone must prioritize in their lifetime. Everyone wants to have that...January 14, 2019
Top Ways to Make Your Money and Savings Grow
Everyone wants to save money. Whether you’re planning for a grand European vacation, buying that dream house, saving for your kid’s...January 14, 2019
Study Reveals That Debt Repayment Isn’t A Top Priority For Most Millennials
A study by Northwestern Mutual found that Millennials have debts totaling an average of $36,000 and they spend nearly 34% of...January 14, 2019