Hong Kong property prices, already the world’s highest, rose to a record high in October, defying a continuing street protest and the prospect of higher interest rates in the United States.
Average prices are now 14.9 times median household income, according to research from Demographia, compared with 7.3 in London, the Financial Times reported Monday.
Despite the protests, which have shut down major highways across the main business district, new developments have continued to attract strong interest.
When sales began last month at Pavilia Hill, a new luxury development, demand was such that a raffle had to be held simply for the right to put down a deposit.
The first round of apartments – the cheapest of which carried an asking price of more than US$2 million – sold out within hours.
Prices have more than doubled since 2008 fuelled by record low interest rates imported from the US, a buoyant economy and interest from mainland Chinese buyers.
Chief Executive Leung Chun-ying said in a recent interview that the cost of housing was a “major concern” and one that the government must “do more” to fix.
“Poll after poll has shown that the one issue that’s uppermost on the minds of the people, particularly the younger generation, is the cost of housing,” Leung said.
“The shortage of housing has worsened to such an extent that some young married couples live apart. It is not acceptable.”
The end of quantitative easing in the US could also act as a dampener by raising borrowing costs.
Hong Kong effectively imports interest rate policy from the US through its currency peg, meaning that mortgage rates have been at rock bottom for a number of years, despite robust economic growth and low unemployment.
Citi recently cut its economic growth forecast for this year and next because of the drag on tourism and retail sales stemming from the protests.
However, many property analysts remain unmoved, believing that any correction in prices remains a long way off, the report said.
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