Abstract
After house price bubbles burst in many OECD countries, investors are keeping a very watchful eye for price developments on asset markets that signal a bubble. Overvaluation in housing and, to a much lesser extent, also in office markets is not an Asia-wide phenomenon, but is concentrated in a few countries only, for instance China, Hong Kong and Singapore. No downside risks are being displayed ...
Abstract
After house price bubbles burst in many OECD countries, investors are keeping a very watchful eye for price developments on asset markets that signal a bubble. Overvaluation in housing and, to a much lesser extent, also in office markets is not an Asia-wide phenomenon, but is concentrated in a few countries only, for instance China, Hong Kong and Singapore. No downside risks are being displayed in Indonesian and Korean property markets or in Malaysian office markets. While the risk of a downward adjustment has obviously risen on some markets, we do not expect that this can trigger severe macroeconomic distortions as there is no sub-prime segment in the analysed markets, debt-financing plays a much smaller role than in many OECD countries, and medium to long-term drivers like urbanisation and population growth are still intact.
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