The average price of a home in Hong Kong has reached a phenomenal 15 times annual family income, and there is probably more to come, with benchmark US interest rates remaining flat probably well into 2015 and possibly beyond, according to a new report by the Hong Kong-based Asianomics financial advisory firm.

That ratio of price to income is the highest recorded in the city’s history and compares with a ratio just five to six times annual income in the west. Nonetheless, according to an analysis issued this week by Asianomics’ Justin Pyvis, “low interest rates have made it easier to take on increasing amounts of debt and push prices up but at a fundamental level real estate prices in Hong Kong are still sound and are simply the result of a supply and demand mismatch.”

In other words, despite the fact that prices have risen to the highest level in the city’s history, Asianomics thinks there is no bubble. Nonetheless a long string of property analysts have been confounded, calling a busting of it annually since 2009, when prices rose by 28.5 percent. But then they rose in 2010 by 21 percent, in 2011 by 11.1 percent – and then soared upwards by 25.7 percent in 2012.

In 2012, speculators ignited a price war over car parks – nothing more than two painted lines on a garage floor in a housing complex—and drove the price to as much as HK$1 million (US$77,560).

In 2013 Forbes Magazine analyst Kenneth Rapoza wrote that “prices cannot possibly be sustainable at these levels. Whether or not they decline by double digits anytime soon remains to be seen. Asia, and China in particular, is fast becoming the world’s biggest consumer market. It’s already the world’s trading hub. Lots of money floating around in that part of the world could sustain prices on the high side. But no one should expect prices to rise like this again. At these levels, if Hong Kong is not a housing bubble, then nothing is.”

Instead, by July 2014 prices had risen by another 4.2 percent in the face three increases in stamp duty and other fees since 2012. According to the July issue of the Global Property Guide, Morgan Stanley expected prices to drop 10 percent in 2014, Colliers International 5 percent, Merrill Lynch, a 5 percent fall in 2014 and another 15 percent in 2015, Deutsche Bank a fall of 15 percent in 2014 and Barclays forecast a 30 percent plunge by the end of 2015.

That isn’t to say it won’t crack, and calling a market is a dangerous game. The last time property prices topped in Hong Kong – in 1997 – they fell for seven straight years without a letup, losing half their value and leaving thousands underwater.

The price of residential property in the territory has been recognized as a volatile political issue, contributing substantially to the anger of younger residents who have held much of the city’s streets hostage over the past several weeks in the Occupy movement. The New York Times recently cited the sale of a 275 sq ft flat for HK$5.6 million (US$722,000), basically pricing out even two-income families.

“Those facts have almost certainly contributed to the recent social angst and ultimately the ongoing student-led protests,” Pyvis said in his report.

Complicating the problem for younger buyers the unemployment rate, while only 3.3 percent for Hong Kong as a whole, is at nearly 8 percent for those under 25. The economy has flagged, with GDP growth falling to 2.3 percent in the present quarter.

The city government’s leaders have long been criticized for cooperating with Hong Kong’s oligarchs to limit the price of land, contributing to the astronomical prices in what is the world’s second-most expensive city for residential property. Over the past decade, Hong Kong’s private housing stock only increased by 11 percent, according to Pyvis’s analysis. Commercial property stock increased by 17 percent over the same period.

“Yet,” he wrote, “demand has been insatiable and thus rental prices have responded accordingly: residential property rents are up 115 percent, office rents 137 percent and retail rents 130 percent.

But an even larger response has been in the debt-fuelled run-up in property prices, with residential property prices up 275 percent, office property up 498 percent and retail up 414 percent over the same period. Private debt to GDP has gone from approximately 120 percent to over 170 percent.

To put the city’s prices into perspective, prime retail real estate in Hong Kong is four times the price of the equivalent in Dubai and more than twice that of Singapore.

“But this is not an issue unique to Hong Kong. It is an issue that everyone is well aware of but no one in power really knows what to do about (or rather, wants to do anything about). It stems from the combination of zoning restrictions that artificially constrain supply and encourage capital-gains speculation (at least for residential real estate, retail is a bit trickier) as well as the enabling fiat money debt-rollercoaster the world cannot seem to exit.”

While the Hong Kong government is slowly allowing the supply of property to catch up to demand, according to the Asianomics report, “it’s mostly a case of too little too late. But unless global interest rates normalize or some kind of macroprudential regulation sends the hot money to the next best asset class (as we are witnessing in Singapore), don’t expect things to change “