GLOBAL central banks continue their drive to push interest rates lower. Money, money, money. A lot of it is being printed and a lot of it doesn't stay put - it flows to Asia, where growth and returns are higher. Interest rates fall, asset prices rise - especially property, the most interest rate-sensitive asset of all. Since March 2009, when the global financial crisis ended in Asia, residential property prices have more than doubled in Hong Kong. They're up by 55 percent in Singapore, 50 percent in Chinese mainland and by 40 percent in Malaysia.

For foreign investors lucky enough to have bought back in 2009, returns have been 20-50 percentage points higher in US dollar terms, thanks to inflows pushing currencies north in tandem with property. Unable to control these inflows and local interest rates as a result, authorities throughout Asia have resorted to direct and administrative controls on property to keep prices in check. And still they rise. Compared to March 2000, prices in Asia now are as high as they were in the US just before the eruption of the subprime crisis that threw the entire global economy into the biggest recession since 1929.

How much higher can Asia's property prices go? Have they risen "too far" already? If so, can GDP/income growth restore a proper balance? Or has a bubble formed that only a blowout can now "fix"?

Let's answer the last question first, or, rather, "address" it. Because nobody we know of has ever come up with a way to identify a bubble until after it's blown. The best one can do is to look hard at the data and make reasonable inferences about what comes next. Let's try that.

Housing as an investment

While most people buy homes to live in, many in Asia buy them as investments. Often they are blamed for driving house prices higher than they should be. Singapore and Hong Kong are home to Asia's wealthiest investors and highest home prices.

Is there a connection? More generally, from an investment return perspective, how have home prices compared to, say, equities?

In Hong Kong, equities and property have offered similar returns over the long haul. Since 1985, equities have risen by 10.6 percent per year, a tad more than the 9.8 percent return delivered by property. Ditto for Singapore. In US dollar terms, both property and equities have returned 8.1 percent per year since 1985.

Asia's home prices have risen rapidly since 2000 but incomes have risen even faster. Today, home prices are 22 percent lower, relative to incomes, than they were they were back in 2000. By this gauge, Asia has little to fear on the property front - homes are become more affordable, not more expensive.

Housing risk isn't necessarily about prices per se. In the US, the bigger problem was the underlying build-up of leverage and debt, which ultimately could not be sustained. How does Asia look from a debt perspective? Who in Asia is most vulnerable to a potential "interest rate shock"?

Asia's housing debt as a percentage of income has risen steadily over the years. For the most part, that's normal. Housing is a "superior" good. As incomes go up, housing expenditures tend to go up even more. The fact that housing debt, even as a percentage of income, is rising across the region is not, by itself, cause for alarm. As always, it's a question of "how far how fast" and whether the debt can be serviced in bad times as well as good.

High debt is what caused the US bubble and its collapse. When interest rates rose, borrowers found it increasingly difficult to service their debts.

For Asia, the good news part of the story above is that regional debt loads remain far lower than they were in the US. It is not unreasonable to conclude that risks in Asia are lower accordingly.

Debt loads aren't a big problem when interest rates are zero. It's when you can't make the payments that trouble begins and what used to be a hidden bubble isn't so hidden anymore. How burdensome are Asia's housing payments today and who will be in trouble when today's rock-bottom rates start to go up?

Annual payment

We calculate the annual payment required to retire the stock of outstanding housing loans in each country, at the prevailing interest rate and subject to the condition that principal and interest are re-paid in full over the next 20 years.

Who's got Asia's biggest payments? By this gauge, it turns out to be Taiwan, where 2.9 percent of GDP goes to pay housing principal and interest. But Hong Kong and Singapore are almost identical, paying 2.8 percent and 2.7 percent of GDP to service housing debt each year.

Where does Chinese mainland fall on this ladder? Near the bottom with annual housing payments of only 1.4 percent of GDP.

Worry? It wouldn't seem so. Especially when one compares Asia's debt burdens with the US. There, payments are running at 5.4 percent of GDP.

Risks remain. Interest rates have been on the floor for 5 years. What's going to happen when they go back up? Who's vulnerable in Asia?

The simplest way to answer this question is to re-calculate the housing payments made above under the new assumption that interest rates have returned to their pre-crisis level. Who suffers most will depend partly on debt loads and partly on whose interest rates fell the most and will now rise the most.

It comes as no surprise that interest rates in Singapore and Hong Kong have fallen comparatively the most in Asia. The situation is different in Malaysia. There, rates are not much different from pre-crisis levels and the risk of interest rate shock seems low. In Chinese mainland, interest rates are higher today than they were on average before the crisis. Theoretically, a return to precrisis rates would be a pleasure, not a pain.

A doubling of interest rates of course does not imply a doubling of one's monthly payment because most of what is being repaid is principal, not interest. Therefore, while Singapore and Hong Kong interest rates might rise comparatively the most in Asia, it does not follow that the risk to their economies is greatest.

Payments in Singapore and Hong Kong would be relatively easier to manage. Nevertheless, a rise in mortgage rates to precrisis averages (a doubling in these two cases) would, by our measure, bring a 25 percent increase in monthly payments in Hong Kong and a 16 percent monthly increase in Singapore.

The US remains an interesting case. Mortgage rates there have fallen to 2.6 percent, about half their precrisis norms, thanks to QE3 and government purchases of mortgage bonds, which continue to run at a pace of US$40 billion per month. In recent weeks, markets have come to believe the US Federal Reserve will need to taper back these purchases in the near future.

But if the result is that average monthly mortgage payments go up by 25 percent, as our calculations suggest, the improvement seen in the housing sector over the past year could come to an abrupt halt. Time will tell but the numbers here suggest the US is every bit as vulnerable to higher interest rates as Asia is.

Center of trouble

When economies get over-extended, property is almost always at the center of the trouble. Property brought down Asia in 1997. Property brought down the US - and the rest of the world - in 2007/08. Recovery is not complete. Risks remain.

Low rates and capital flows are pumping up property sectors in Asia and the eventual return of interest rates to normal levels could reveal some households and countries as having become overextended.

Finally, we note that to the extent Asia's rising home prices follow from capital inflows, this is not likely to end when global interest rates go up. Quantitative easing and low global rates are only part of Asia's inflow story. The much larger, and longer-term driver of capital inflows into the region is the fact Asia now generates the lion's share of the world's incremental growth. Put simply, businesses want to be where the growth is. This means investment and capital inflows into Asia are likely to continue long after monetary policy in the G3 has returned to normal.

The article was edited for length. The opinions expressed are his own.