“The sharp run-up in house prices raises the risk of an abrupt correction. A sharp price correction would lead to falling collateral values and negative wealth effects, which could trigger an adverse feedback loop between economy activity, bank lending, and the property market. The property sector is the main source of domestic economic risk.”

“The International Monetary Fund has warned that Hong Kong could see an abrupt fall in property prices after years of dramatic increases in one of the world’s most expensive housing markets.
Home prices in the Asian financial hub have skyrocketed 90 percent since 2009 due to an influx of wealthy mainland Chinese buyers, pushing home-ownership beyond the reach of many of its seven million people.
“The sharp run-up in house prices raises the risk of an abrupt correction,” the IMF said in its annual review of Hong Kong’s economy.
“A sharp price correction would lead to falling collateral values and negative wealth effects, which could trigger an adverse feedback loop between economy activity, bank lending, and the property market.
“The property sector is the main source of domestic economic risk,” the Washington-based organization said.”

– from ‘IMF Sounds The Alarm On The Hong Kong Housing Bubble’, Business Insider, 12 Dec 2012

Okay, so, they’re talking about HK, not Vancouver, but what’s the difference?
“Running out of land” (and other fables); Spec mania; Bubble bursts.
– vreaa

12 responses to ““The sharp run-up in house prices raises the risk of an abrupt correction. A sharp price correction would lead to falling collateral values and negative wealth effects, which could trigger an adverse feedback loop between economy activity, bank lending, and the property market. The property sector is the main source of domestic economic risk.”

    • Naked Official #9000

      Go back to bed, Vancouver

      Everything is going to be alright ™

      • …”In a report earlier this week, Toronto-Dominion Bank said British Columbia has the “highest level of income inequality among the provinces,” adding that “B.C. ranks first in Canada in terms of individuals living in low income.”…

        [G&M] – Moody’s Puts BC On NegativeWatch

        …”A leading credit-rating agency has sounded the alarm by reducing its outlook on British Columbia’s debt to “negative” from “stable” in the latest warning signal on the fiscal health of provincial governments.”…

        http://tinyurl.com/akl8yv2

      • BC also has the second lowest personal income tax rate, one of the lowest corporate tax rates, and a favourable treatment of dividends. Consumption taxes have been increased in lieu. Not saying tax policy is affecting income inequality, but, maybe, tax policy is affecting income inequality.

      • Real Estate Tsunami

        We are celebrating 30 years of Foodbanks which were supposed to be temporary, just like the foreign workers.

    • Rob son's street

      the future is nurtured by the roots of our past, grasshopper Nem.
      so.. study British Columbia Solar Arc my half brother, and keep your shotgun loaded with the safety catch on.

  1. Real Estate Tsunami

    “wealthy mainland Chinese buyers”.
    the boys at the IMF must be all a bunch of racists.

  2. Great and informative article. Thanks.

    http://www.Anonson.com Vancouver Real Estate Agent

  3. Home prices in the have skyrocketed 90 percent since 2009 due to an influx of wealthy mainland Chinese buyers, pushing home-ownership beyond the reach of many of its million people.

    Bingo – prices are set on the margin. If HAM is willing to pay more for his house, then everyone else buying must as well. It’s no different in Vancouver.

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