Hong Kong, Shanghai and Sydney property prices have reached risky levels, says S&P Global Ratings.
"Asset prices, especially property prices, today are as stretched as they were before the Asian crisis," Elena Okorochenko, head of Asia-Pacific ratings, said at a conference in Singapore yesterday.
Combined with increased household debt, prices in Sydney, Hong Kong and Shanghai appear stretched. "It's a risk worth monitoring," she said.
Home prices in Sydney have surged 75 percent in the past five years, ranking it as the world's second most-expensive housing market behind Hong Kong, where prices climbed 21 percent in the year through June.
A Morgan Stanley report said the growth rate in Hong Kong home prices peaked in June and a zero growth rate is expected by the end of next year.
The report said that the sound economic performance in Hong Kong, together with mortgage plans offered by the developers in the first-hand residential market, have supported the current home prices.
But it said risks remain in the property market as the Hong Kong Inter- Bank Offered Rate is rising close to the London inter-bank rate, which would lead to a higher cost for borrowing.
A steady increase in housing supply, as well as recent capital outflow control imposed by the Chinese government to mainland developers, could help suppress land and home prices in Hong Kong.
Meanwhile, a 26,925-square-foot site in Stanley which comprises a luxury project is to sell by tender, said property consultant JLL.
The site has a plot ratio of 0.75, which represents a maximum gross floor area of about 20,194 sq ft. Located at 20 Stanley Village Road, the estimated per-square-foot price for the site is HK$37,000 to HK$38,000.
Vista Stanley was completed in 1974 and comprises two three-level mansions, with 12 apartments sized at 1,608 sq ft.
In the secondary market, a 1,114-square-foot flat at Pine Mansion in Taikoo Shing was sold recently for HK$22 million, or HK$19,748 per sq- ft - HK$1 million lower than the asking price - according to Centaline Property Agency.
The seller purchased the four- bedroom home for HK$950,000 back in 1982.
In Happy Valley, a 661-sq-ft home at 13 King Kwong Street was sold for HK$7.2 million, or HK$10,893 per sq ft, 10 percent lower than the asking price, says Ricacorp Properties. In June, the price of the three-bedroom apartment was listed at HK$8 million.