Think New York City real estate is expensive? In Hong Kong, Mumbai, Beijing and Shanghai, homebuyers may be saving for three decades to buy a modest home.
According to an analysis of home price to income ratios by Oxford Economics, buyers in those cities making the local median income need to save for more than 30 years to buy a 970-square-foot apartment. And the returns from rents in those four cities are “remarkably low,” indicating that real estate values are “stretched,” Bloomberg reported.
Gross rental yield in the four Asian cities was lower than 10-year government bond yields in 2016, the opposite of New York.
Still, rising interest rates could temper price growth in those cities. “We expect housing price increases to moderate in the coming years across Asia, with outright falls possible in some markets,” the report said.
According to the study, New York ranked ninth on the highest house price to income ratios. It will take the average household making the local median income about 15 years to buy a standard home in the Big Apple. London placed fifth, at about 30 years, the study found. [Bloomberg] — E.B. Solomont