Here's a theory on the Hong Kong housing bubble courtesy Nomura research. Here's what you should know beforehand:
1) Hong Kong real estate is very very expensive.
2) This is the year of the Water Dragon (I'm Earth!) which should imply a noticeable baby boom.
The premise of the note is simply that while real estate prices have always been horribly expensive, what's puzzling is that it's still accelerating in spite of a growth slowdown! A measure of affordability, as the note shows would be a ratio of home prices and income. This is what it looks like over the long run:
And what's happening on the baby front? Boom?
"We are not seeing the usual boom in Dragon babies – Even on the demographic front, we are witnessing something very unusual. In the first eight months of 2012, there were only 60,103 births in Hong Kong. Compared to the same period in 2011, this is down 5.2% y-y. In the past two Years of the Dragon (2000 and 1988), the number of births rose by 6% and 4% even as the marriage numbers declined by 1% and 7%. Thus, the current condition of a 5% drop in births while marriages are up by 5% is highly unusual"
Draw your own conclusion, I've left out the rather obvious one from the note. No link or causality of any sort but it is a bit unusual in a dragon year.
1) Hong Kong real estate is very very expensive.
2) This is the year of the Water Dragon (I'm Earth!) which should imply a noticeable baby boom.
The premise of the note is simply that while real estate prices have always been horribly expensive, what's puzzling is that it's still accelerating in spite of a growth slowdown! A measure of affordability, as the note shows would be a ratio of home prices and income. This is what it looks like over the long run:
And what's happening on the baby front? Boom?
"We are not seeing the usual boom in Dragon babies – Even on the demographic front, we are witnessing something very unusual. In the first eight months of 2012, there were only 60,103 births in Hong Kong. Compared to the same period in 2011, this is down 5.2% y-y. In the past two Years of the Dragon (2000 and 1988), the number of births rose by 6% and 4% even as the marriage numbers declined by 1% and 7%. Thus, the current condition of a 5% drop in births while marriages are up by 5% is highly unusual"
Draw your own conclusion, I've left out the rather obvious one from the note. No link or causality of any sort but it is a bit unusual in a dragon year.
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