:00:00. > :00:00.new plans to limit bankers' bonuses. A new EU law will restrict bonuses
:00:07. > :00:20.to a maximum of two years' salary. Skyhigh property prices, we look at
:00:21. > :00:28.whether measures in Hong Kong are working. And, investing in China.
:00:29. > :00:35.Why business people in China favoured the mainland.
:00:36. > :00:39.Welcome to Asia Business Report. Property prices in Hong Kong have
:00:40. > :00:43.skyrocketed since 2009 as Asia was spared the worst of the global
:00:44. > :00:50.financial crisis, and Chinese buyers have poured in. Art, is Hong Kong in
:00:51. > :00:55.danger of another property collapse? -- but.
:00:56. > :01:03.The most expensive properties in the world are found here, on the peak in
:01:04. > :01:09.Hong Kong. A house sold for a record 17,000 US dollars per square foot.
:01:10. > :01:13.The street down the road is the most expensive property in the whole of
:01:14. > :01:23.Hong Kong. Overall prices hit a new high last spring. The capital gains
:01:24. > :01:25.tax and Chinese money means it is an attractive place to invest.
:01:26. > :01:33.Foreigners now have to pay a tax equal to the quarter of the
:01:34. > :01:35.transaction price. The costs involved in purchasing property have
:01:36. > :01:48.become so high that it has become a less attractive place to invest.
:01:49. > :01:52.Higher global interest rates and mortgage costs are heralded. It is
:01:53. > :01:59.hard not to wonder, is the red bubble? Houses are estimated to be
:02:00. > :02:05.overvalued by 30 or 40%. That is one of the most overvalued markets in
:02:06. > :02:09.the world. When the last bubble burst during the Asian financial
:02:10. > :02:14.crisis, house prices fell by 60%, and continued to decline for six
:02:15. > :02:21.years. The trouble with hobbling markets is that once interest rates
:02:22. > :02:27.rise, so does the risk of collapse. But, property developers say it is
:02:28. > :02:34.different this time. I think the interest rate was in excess of 10%.
:02:35. > :02:40.Now it is only 3%, so the buyers will find it very affordable. House
:02:41. > :02:48.prices are 13 times the average salary. They are higher than during
:02:49. > :02:54.the last bubble. I work in professional sales, and I spend
:02:55. > :03:06.about 50 or 60% of my whole salary to pay for my mortgage. Even if I
:03:07. > :03:12.spend nothing, I have to save for several years for the deposit.
:03:13. > :03:17.Adding further pressure, public housing is inadequate. It covers
:03:18. > :03:23.only 30% of the population. This woman, with her family, lived in a
:03:24. > :03:29.400 square feet flat, the size of a studio. TRANSLATION: The rent is
:03:30. > :03:36.really high. It is our biggest expenditure. It takes up half of our
:03:37. > :03:41.monthly income and we don't earn much money. She is still one of the
:03:42. > :03:44.lucky ones. Illegal flats built on rooftops have sprung up to cope with
:03:45. > :03:53.the unaffordable and inadequate housing. This is the dark side of
:03:54. > :03:58.being in a property hotspot. Earlier, we spoke to a real estate
:03:59. > :04:05.consultant based here in Singapore, and asked him what has been driving
:04:06. > :04:11.up the prices. Firstly, low interest rates, and
:04:12. > :04:17.secondly huge liquidity. Money needs to be pumped outside the banking
:04:18. > :04:28.system, so in terms of getting returns, it loses about three or 4%.
:04:29. > :04:30.On top of that, capital... That is a promise in terms of putting money
:04:31. > :04:36.elsewhere, other than putting it in the bank. Will it ever ease up? We
:04:37. > :04:39.can look at all the construction taking place behind us, there
:04:40. > :04:47.appears to be no sign of it letting up. The market has actually seen a
:04:48. > :04:51.steady rise in prices. Hong Kong prices have risen almost double in
:04:52. > :04:57.the last four years. Singapore has risen about 60%. In the last four
:04:58. > :05:08.years we have humorous property measures -- numerous. Introducing
:05:09. > :05:13.tighter duties... Making it more affordable for people to purchase
:05:14. > :05:20.properties? It is a two tier system, where 1st-time buyers are
:05:21. > :05:24.not precluded from getting better loans from the banks. At the same
:05:25. > :05:30.time, during the last three or four years, the supply has increased in
:05:31. > :05:40.terms of public housing, subsidised housing. The two factors worked hand
:05:41. > :05:44.in hand. In Malaysia, the PM has come under criticism on social media
:05:45. > :05:55.for his comments on the price of water spinach. He says it is not
:05:56. > :06:03.fair for the government to be blamed for rising prices.
:06:04. > :06:10.Water spinach is a popular vegetable. It is delicious when
:06:11. > :06:15.stirfried with chilli and garlic. Its price has recently gone down by
:06:16. > :06:19.50%, with the PM wondering why he is not getting enough praise for it. If
:06:20. > :06:23.the PM soundtrack is desperate compliment, there is good reason.
:06:24. > :06:27.Since it cut back on subsidies, his popularity has dropped in the polls,
:06:28. > :06:31.despite the fact he has given cash handouts to the poor, and also
:06:32. > :06:38.announced doors that can sell items below market prices. -- stores. A
:06:39. > :06:46.lot of Indonesian say they wouldn't have to go through this painful cuts
:06:47. > :06:51.if the government didn't have to go through these cuts. -- Malaysians.
:06:52. > :06:56.People who don't appreciate these price hikes are not willing to come
:06:57. > :07:01.on camera to talk about it. This man tells me Malaysians should be
:07:02. > :07:04.thankful and not blame the government for everything. He says
:07:05. > :07:09.people need to learn to save and control their spending. A lot of the
:07:10. > :07:11.criticism of the PM has come online with some interesting photos. Here
:07:12. > :07:23.is one, with some interesting photos. Here
:07:24. > :07:28.popular are easily and cheap. But it is not a staple in the Malaysian
:07:29. > :07:31.diet. Malaysians feel the PM is disconnected from their everyday
:07:32. > :07:36.lives. Even here, at this night market, many products have kept
:07:37. > :07:41.their prices. There are signs that price hikes are to come. This
:07:42. > :07:46.chilli, for example, has increased by up 50% overnight. Hong Kong
:07:47. > :07:52.prices may have come down, but this latest comment shows Malaysians that
:07:53. > :07:58.the PM is disconnected from the hardships Malaysians face.
:07:59. > :08:02.Global growth is expected to pick up this year, echoing the view made by
:08:03. > :08:07.the World Bank earlier this week. The head of the IMF added a warning
:08:08. > :08:13.that we need to watch out for deflation, a situation where prices
:08:14. > :08:17.keep falling. With inflation running way below Central Bank targets in
:08:18. > :08:23.most corners, clearly we are seeing rising risk of deflation. It could
:08:24. > :08:30.prove disastrous for the recovery. If inflation is the Genie, then
:08:31. > :08:35.deflation is the ogre. It must be fought decisively. Business leaders
:08:36. > :08:40.in Asia-Pacific are feeling optimistic about prospects of this
:08:41. > :08:47.year when compared to 2013. That is according to wait survey by an
:08:48. > :08:53.economic research group. They say 46% say their expectations of Asia
:08:54. > :08:55.have improved from last year. Asia-Pacific is delivering better
:08:56. > :08:59.profit margins than the global average, especially in Southeast
:09:00. > :09:05.Asia. Their priority is China, and Indonesia has overtaken India, now
:09:06. > :09:12.in second place. I spoke with Justin Wood, the author of the report. If
:09:13. > :09:16.you look at 2013, it was a bit of a turbulent year for many countries.
:09:17. > :09:21.In China, which is one of the big engines of growth, there were
:09:22. > :09:30.concerns around debt, and government attempts to try to slow the debt.
:09:31. > :09:36.Also, America. In the scaling back of quantitive easing programmes.
:09:37. > :09:47.Both of those things caused growth in Asia to suffer. Wendy 14 is
:09:48. > :09:51.looking much better. The rich parts of the world have a synchronised
:09:52. > :09:56.recovery. Japan, Europe and North America all growing, and the
:09:57. > :10:06.concerns that have dogged many of these places. Will use, are
:10:07. > :10:14.receding. Shares are trading higher this morning after a set of robust
:10:15. > :10:17.earnings from the bank of America. These are also helped by the IMF
:10:18. > :10:33.announcement that they expect global growth to pick up this year.
:10:34. > :10:41.You are watching Asia Business Report.
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