Hong Kong’s sheer tower blocks offer fabulous views of forested peaks and busy shipping channels to those who have the stomach to resist a touch of vertigo. But right now it is not just the physical height that will make your head spin.
Residential property prices are near record highs as the tiny island has been squeezed between Chinese money looking to escape the mainland and the ultra-loose monetary policies of the US Federal Reserve.
For local banks facing the risks of a bubble bursting, the great saving grace is that there are quite strict limits on the loan-to-value ratios allowed for mortgage lending. Even with a heavy drop in prices – some are predicting up to 30 per cent falls this year – losses should be limited. However, in combination with rising interest rates and the ebbing of both the Chinese economy and US liquidity, small property price declines will be painful for the island’s most sophisticated banks.