There is no problem with property values or rent values being high because they are the result of demand for living in a high quality area. There isn't a problem either with these prices varying over time as the attractiveness of the area changes.
The problems are wholly on the supply side, where either
- there are bad laws that lead to any of the following, or
- developers legally or illegally cooperate to suppress supply
- landlords cooperate to push up rents or reduce quality.
- investors use land or housing units as speculative assets
- normal people want to use their primary residence as a way to build wealth, so politically support measure that artificially inflate their property values. Individually, this is not a problem, but when everyone does it, the system breaks.
The goal is to design a system where all of the above doesn't happen. A very big task.
The problems are wholly on the supply side, where either
- there are bad laws that lead to any of the following, or - developers legally or illegally cooperate to suppress supply
- landlords cooperate to push up rents or reduce quality.
- investors use land or housing units as speculative assets
- normal people want to use their primary residence as a way to build wealth, so politically support measure that artificially inflate their property values. Individually, this is not a problem, but when everyone does it, the system breaks.
The goal is to design a system where all of the above doesn't happen. A very big task.
P.S. I don't know anything about HK.