The real estate markets in South Korea, Taiwan, Hong Kong, and Shanghai are very lively at the moment, with property prices surging.

Hong Kong's housing price index jumped 20.4 per cent in the period from December to August. In Taiwan, average housing prices in the April-June quarter rose 9.6 per cent from the January-March quarter.

In South Korea, housing prices have been on the rise for five consecutive months since April.

The common factor fueling these markets is the low cost of housing loans resulting from low-interest rate policies introduced by governments to cope with the recent worldwide financial crisis.

These low loan rates have encouraged potential home buyers to take the plunge.

An official of DTZ, a Singaporean real estate research firm, said that in addition to low interest rates, people were diverting money into real estate having realised the high-risk nature of investing in complicated financial products after the deepening of the financial crisis following the collapse of Lehman Brothers last autumn.

In Singapore and Taiwan, ordinary citizens believe that real estate prices always rise, which attracts more investment in the real estate sector.

A Singaporean real estate broker said that in 2007, condos worth millions of dollars were being sold at record high prices every day as investment money flooded in from the Middle East.

This time, there is greater demand for condos within the reach of ordinary citizens, the broker said, indicating the complex relationship between genuine and speculative demand.

But the relevant monetary authorities are wary of the real estate markets heating up.

This is because banks, which have fewer borrowers because of the recession, have been competing to extend housing loans by cutting home loan interest rates, a trend that could cause bubbles in their respective real estate markets.

South Korea has introduced a limit on housing loans to between 50 percent and 60 percent of the price of the condominium. The financial authorities have also called for stricter screening of loan applications.

Property prices in Seoul have risen 20 per cent since the start of the year.

In Hong Kong, the government asked the banking industry in September to refrain from cutting loan interest rates any further.

Meanwhile, the central banks of Taiwan and South Korea have announced they will closely watch rising housing prices and growth in the number of new housing loans.

--The Yomiuri Shimbun/ANN