The World Bank and the IMF are warning of the possibility of a new real estate bubble, particularly in Asia. But not for the first time, they are a few steps behind the curve. Property in Hong Kong has been soaring for months.
"Fears of a New Bubble as Cash Pours In" declares the front page of the Wall Street Journal Asia (print copy) today.
"Concerns are mounting that efforts by governments and central banks to stoke a recovery will create a nasty side effect: asset bubbles in real-estate, stock and currency markets, especially in Asia."
"the sudden reappearance of billions of dollars in investment capital in East Asia is "raising concerns about asset price bubbles" in equity markets across Asia and in real estate in China, Hong Kong, Singapore and Vietnam. Also Tuesday, the International Monetary Fund cited "a risk" that surging Hong Kong asset prices are being driven by a flood of capital "divorced from fundamental forces ..."
Not for the first time, the World Bank and IMF are a few steps behind the curve.
Property prices in Hong Kong have been soaring for months, hitting record highs recently, while in Shanghai, economists have been warning of a property bubble for some time, making comparisons to the relationship between the property sector and the broader economy in the US two years ago. (Although the extent to which China's bubble is rooted in fraudulent financial practice is unknown.)
The question that few people seem able to answer is, where is this font of investment capital originating, and has anyone learned any lessons at all from the events of the last two years? Or maybe we should just conclude that property investment really is as safe as houses?
