Hong Kong, Singapore home prices top The Economist’s global house-price index

Hong Kong and Singapore have topped The Economist’s latest quarterly global house price index as the countries where home values rose the most.

Prices in Hong Kong rose 20.1 per cent from Q4 2009 to Q4 2010, while in Singapore they rose 17.6 per cent. According to the survey of 20 economies, home values in China rose 6.4 per cent, Australia rose 5.8 per cent, New Zealand rose 0.9 per cent, and Japan dropped 3.6 per cent.

Hong Kong also ranked as the second most overvalued market according to the survey, with homes overvalued by 53.7 per cent. Australia took top honours in that category with homes overvalued by 56.4 per cent. New Zealand’s homes were overvalued by 20.6 per cent, Singapore’s at 18.1 per cent, China’s at 12.9 per cent, and Japan’s homes were undervalued at 35.2 per cent.

The Economist calculated overvaluation and undervaluation of homes by comparing the ratio of prices to rents. In explanation of this methodology, the newspaper wrote: “In theory, the price of a home should reflect the value of the services it provides. People who choose to rent their homes buy those services on a monthly basis. Home prices should therefore reflect the rents that tenants pay.”

Only in Hong Kong, Singapore, and Switzerland were housing prices more overvalued than before the global financial crisis began in the third quarter of 2007 – price to rent ratios in every other economy surveyed dropped in the same time period.

In Japan, owning compared to renting has been getting cheaper every year since 1990, when the country’s property bubble burst. Homes are now undervalued there by over a third, the latest survey revealed.

Filed Under: Asia (General)AustraliaChinaHong KongJapanNewsNews by CountrySingapore


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  1. Matt Cooper says:

    Australian housing is vastly, dramatically overpriced, by all reasonable measures. Unchecked commodification of shelter for the population has been caused by misguided governments failing to regulate the housing market while encouraging the use of tax loopholes like negative gearing and permitting over-leveraged speculators to bid up asset values so the govt can benefit from huge intakes of land tax, rates and stamp duty. The recent analysis by The Economist is right on the money, and you can see from the chart gallery below (including two charts from The Economist house price web tool) just how overvalued Australian housing really is…..

    Global House Price Bubble Charts

    12 months ago there was complete denial that real estate was in trouble, but now the realization is beginning to dawn on many that something terribly serious is about to occur in Australia. The spruikers maintain faith in a soft landing, but they’re straight out of luck this time. The bigger the boom, the bigger the bust, and the property boom that began in Australia in the nineties evolved into the greatest real estate bubble known to mankind. The bust that’s coming will be a doozy. As 2011 unfolds the spruikers will come to understand that real estate in Australia is dead for generations. For anyone who’s interested in reading some excellent blogs about the Australian property bubble I highly recommend the blogs hosted on the Australian Property Forum…..

    Oz Real Estate Ponzi Blogs

    During the next two years we can expect to see vacancy rates and inventory levels surge to unprecedented levels as house prices collapse by up to 40 or 50% in most parts of Australia. This might sound extreme, over the top. But how over the top were the 200% to 300% rises in house prices we saw over the past decades. A 50% fall is nothing in the scheme of things, it just brings prices back to a fair level. House prices always revert to the mean and Australia is no different. All the nonsense dreamed up by spruikers about shortages and population growth, it’s all just hot air, designed to breath more life into the bubble. A vain attempt to blow new life into a dying bubble justifying more unsustainable price increases to already exorbitant asset prices. But the air has run out. Consumers are tapped out. There is no more money left. The bubble is dead. Long live the new new paradigm, where an average family can finally afford a decent home in Australia. It’s been a long time coming, but soon it will be time for the bears to party. Bring it on!

    Matt Cooper.

  2. [...] http://www.property-report.com/hong-kong-singapore-home-prices-top-the-economists-global-house-… Related Posts:Is Hong Kong pricing itself out of the market? Posted by nauticproperty on May 5 2011. Filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry [...]

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