Analysts warn that Hong Kong could see a repeat of the 1997 property bubble as government figures show that the supply of new flats has dropped to a five-year low, a condition that could boost prices to unsustainable heights.
'Limited new supply and low interest rates encourage investors to enter the property market for investment,' said Eric Wong Chun-yu, a co-head of Asia property research at UBS.
He said the current property bubble had not yet reached the level of 1997. 'But the bursting of the bubble is unavoidable. And [it] is expected to burst in about six months.'
The Centaline City Leading Index shows that prices of 86 key housing estates have risen 27.56% since the beginning of the year and returned to the peak level of last year.
South China Morning Post