Categorized | Featured, International

Residential Estate Market Yields Revisited in Hong Kong

Residential Estate Market Yields Revisited in Hong Kong
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The real estate of United States has been referring as a bubble because of the price-to-rent ratio of the residential and commercial property. However, the metrics in the valuation of real estate is rarely judged by the analysts of Hong Kong. Instead of this, they are trying continuously to focus on the affordability ratio which is the most important factor in mortgage rates.

Although, this affordability seems to be appear healthy but it is just because of the low interest rates. The comparison result and situation is the same as in the United States where it has been proved that the low mortgage rates have been helped different housing schemes and they obtained the chance in a very cheap rate by affordability measures (Affordability index result compiled by National Association of Realtors).

However, the S&P Case-Shiller confirms that the fall in price cannot be stopped. And thus increases the chance of housing double-clip. As Hong Kong is a civilized country and growing strongly as compare to United States which is still struggling in this field therefore the result cannot be compared with each other. The term affordability does not mean that the property is undervalued or it will remain good for you to buy it.

You must say thanks to the tightening in China that in particular, the interest rates are growing higher which is showing that the affordability will be going to look worst if the situation remains unchanged. Instead of using price-to-rent ratio, one can go for other substitute which is the reciprocal of price-to-rent ratio or capitalization rate.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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