UBS Global Real Estate Bubble

Hong Kong property was in Algebris Investments’ top tier of six most inflated bubbles from its longer list of the world’s fourteen biggest bubbles. The territory is ranked as the most expensive housing market in the world for the seventh successive year in 2017, with the medium home price selling for 18.1 times the median household income, according to Forbes. Last week, we discussed how the record price per square foot for a Hong Kong residence was smashed twice on the same day by the same buyer.

In ancient times, like as far back as the 1990s, housing prices grew roughly inline with inflation rates because they were generally set by supply and demand forces determined by a market where buyers mostly just bought houses so they could live in them. Back in those ancient days, a more practical group of world citizens saw their homes as a place to raise a family rather that just another asset class that should be day traded to satisfy their gambling habits. 

Two years ago, when UBS looked at the world's most expensive housing markets, it found that London and Hong Kong were the only two areas exposed to bubble risk.