Property bubble in Hong Kong: A predicted decade-long slump (2016-2025)

TL;DR

This paper analyzes Hong Kong's property bubble from 2003 to 2015, predicts a decade-long slump from 2016 to 2025, and discusses implications for Hong Kong-Beijing relations.

Contribution

It applies known regularities of property bubbles to forecast Hong Kong's housing market decline over a decade, highlighting the role of external factors.

Findings

Hong Kong's apartment prices increased 3.8 times from 2003 to 2015.

A predicted decade-long slump in property prices from 2016 to 2025.

External factors like mainland China's policies influence Hong Kong's market trajectory.

Abstract

Between 2003 and 2015 the prices of apartments in Hong Kong (adjusted for inflation) increased by a factor of 3.8. This is much higher than in the United States prior to the so-called subprime crisis of 2007. The analysis of this speculative episode confirms the mechanism and regularities already highlighted by the present authors in similar episodes in other countries. Based on these regularities, it is possible to predict the price trajectory over the time interval 2016-2025. It suggests that, unless appropriate relief is provided by the mainland, Hong Kong will experience a decade-long slump. Possible implications for its relations with Beijing are discussed at the end of the paper.