The most expensive cities in the world

Manman Luk poses inside her sub-divided unit in Hong Kong

Manman Luk poses inside her sub-divided unit in Hong Kong

Published Jan 22, 2017

Share

Tokyo - For

all the talk of how expensive it is to buy a house in London or New York, the

most expensive major cities in the world are all in Asia.

In Hong

Kong, Mumbai, Beijing and Shanghai, it now takes more than 30 years for a

household with the local median income to buy a 90 square meter (970 square

foot) apartment. That's according to Oxford Economics examination of

price-to-income ratios across the world.

And the

return from rents in Mumbai, Shanghai, Beijing, and also Delhi are

"remarkably low," which could be an indicator that the valuations in

those cities are "stretched." In all four cities, gross rental yield

was lower than 10 year government bond yields in 2016, unlike places such as

Tokyo, Sydney, New York and Seoul.

"We

expect housing price increases to moderate in the coming years across Asia,

with outright falls possible in some markets," economists Tianjie He and

Louis Kuijs wrote in the report. In addition to rising supply and efforts in

some places to cool red-hot markets, changes in interest rates will also put

downward pressure on prices.

Read also:  Got R65m? Buy this and move in!

Low

interest rates in the last decade have helped fuel house price growth across

the world, and the rise in rates in the US and elsewhere will reverse that

trend by making mortgages more expensive. Further rate rises by the Federal

Reserve may attract money back to the US, which would affect property prices in

Asia. 

In the long

term, rising prosperity and demographic factors still point to strong demand in

many large Asian cities, especially those in the less developed economies,

which should continue to support house prices there. However, the population of

Tokyo and Seoul will likely shrink over the next eight years, which would

reduce demand for housing.

BLOOMBERG

Related Topics: