Hong Kong most prone to property bubble in Asia: UBS

The city held the dubious honour globally last year

The greatest risk of a real estate bubble in Asia is currently in Hong Kong, according to the latest annual edition of the UBS Global Real Estate Bubble Risk Index.

The Chinese SAR was assigned an index score of 1.84, the highest bubble risk in the region and third worldwide after Munich and Toronto, which garnered 2.01 and 1.86, respectively.

“In Hong Kong, momentum has abated and prices have fallen slightly since mid-2018,” the authors of the study noted via Mingtiandi. “Nevertheless, although the city is still in bubble-risk territory, given that prices have doubled over the last ten years, there is no fundamental trend reversal in sight.”

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Hong Kong had been rated most at-risk globally for a property bubble a year ago on the index, which has since expanded to rank 24 cities including Madrid, Moscow, Dubai and Tel Aviv.

The Chinese SAR still has the distinction of being the most unaffordable city on the list. To buy a 60-square-metre apartment in the city, one has to save 21 years’ worth of wages, analysts with the bank estimated.

The city also has one of the highest price-to-rent ratios in the world. A 650-square-foot Hong Kong flat will need to be rented out for 37 years before it is fully paid off, UBS estimated.