Luxury property prices in Hong Kong are now 13.8% higher than the record level they achieved during the third quarter of 1997, according to the Hong Kong Monetary Authority. Prices in the mass market space have yet to break their past peak, despite an enormous rebound since the recent financial crisis.
What’s peculiar however is the stark difference between the interest environment today and that which existed back in 1997. As shown below, the 1997 price peak was achieved even with mortgage rates over 10%, whereas today rates are below 2.5%.
Back then Hong Kong’s consumer price inflation was also in the 5-6% range, while right now its just above 2%.
It goes to show how the bull market right now is an entirely different animal from the one which existed before.