Hong Kong consistently ranks highest in studies of the most expensive housing markets in the world.
Rent is so high in HK that many people can only afford to live in subdivided apartments known as "coffin homes". Yet, a lack of space isn't the root of the problem.
Hong Kong's government profits from this artificial scarcity by keeping taxes low and offering land for tender (a process of inviting companies to make proposals to provide services) to the highest bidders, who are increasingly Chinese developers.
There is very little incentive to change this system of unchecked capitalism as a drop in housing prices would mean a restructuring of the government's financial system.
Source: CNBC News