By Nigel Chalk
(Version in 中文)
In the past couple of years, Hong Kong has witnessed a sharp increase in property prices. This has led some to claim that the time has come to change Hong Kong’s “Linked Exchange Rate System”.
This represents a misdiagnosis of the current situation and the wrong prescription for Hong Kong.
It is true that the average cost of an apartment in Hong Kong has risen by almost 20 percent in the past year alone. This stands in stark contrast to what our latest World Economic Outlook described as the dismal outlook for real estate markets in the industrial countries.
And, like many countries in the region, Hong Kong has been the destination for an extraordinary amount of global capital over the past two years.
But how much of these trends have been a product of the exchange rate regime? (more…)
Filed under: Asia, Economic outlook, 中文 | Tagged: capital inflows, credit risks, exchange rate regime, fixed exchange, Hong Kong, inflation, lending standards, property price bubble, property taxes, safe haven, speculation, transactions costs | 1 Comment »