Luxury home prices in Beijing and Shanghai may climb 15 percent every year to surpass Hong Kong in the next 5 to 10 years, said Joe Zhang, deputy head of China investment banking at UBS AG.
Tightening measures of China will not stop prices from escalating and may only “delay” the gains, said Mr. Zhang.
Monetary policies may be eased over time in order to avoid an increase in unemployment, he said.
“It doesn’t matter what the government is doing, whether we have 100 new measures or 10,000 new measures,” said Hong Kong-based Mr. Zhang in an interview.
“In the long term, all these are noises and will disappear, and only one variable matters – money supply.”
China froze mortgages for third-home purchases and promised to speed up trials of real estate taxes this year to cool property prices and restrain foreign capital. Last month, it also increased interest rates for the first time in three years.
The central bank also ordered lenders to allocate larger reserves for the second time in two weeks, draining cash from the financial system to control inflation.
The economy grew 9.6 percent in Q3, higher than the 6.8 percent expansion in Hong Kong and three times the growth rate in the US.
Mr. Zhang said luxury home prices in the Chinese capital and the financial hub will continue to soar as low- and mid-end real estate values are also increasing.
The government said home prices in China climbed for a 17th month in October from the previous year, gaining 8.6 percent.