THE RISK OF PROPERTY BUBBLES IN HONG KONG AND SINGAPORE: ANOTHER AFTERSHOCK CRISIS OF THE GLOBAL FINANCIAL TSUNAMI?

Paul S. L. Yip ()
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Paul S. L. Yip: Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332, Singapore

The Singapore Economic Review (SER), 2014, vol. 59, issue 03, 1-53

Abstract: This paper first provides a brief review of the global financial tsunami. It then explains why the quantitative easing in the US and the unique characteristics of the Asian property markets have contributed to the formation of property bubbles in some Asian economies. Thereafter, it discusses the possibility of a bursting of property bubbles in Hong Kong, Singapore or another Asian economy a few years from now, and highlights that the bursting of the property bubble in that economy could trigger severe corrections of property prices in this region through the contagion effect. After pointing out that the implied crisis could be more severe than that during the Asian Financial Crisis, it (i) discusses policies that could mitigate the damages of the potential crisis and (ii) draws important lessons and conclusions that could pre-empt similar disasters in the future.

Keywords: Asset bubble; crisis; bubble squeezing strategy; property market; expectation of asset inflation; changes in economic behaviors; quantitative easing; Hong Kong; Singapore; JEL Classifications: D43; JEL Classifications: E32; JEL Classifications: E44; JEL Classifications: E52 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1142/S021759081450026X

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