HKG Housing prices rise 23%

[sioux115]

Poor in cages show dark side of Hong Kong boom - Economy Watch on NBCNews.com (http://m.nbcnews.com/business/economywatch/poor-cages-show-dark-side-hong-kong-boom-1B8287394)

Another reason I'm thankful I turned down the SO offer. Good luck keeping up with rent.

[Kitsune]

Perhaps trying the cages in Mumbai instead? :cool:

[sioux115]

Nah, I'll keep my 288 sq/m in the states even if I'm flying the right seat of a turbo-prop.(sadly) It(CX) was a nice dream while it lasted.

It's bullish!t any man has to live in a cage in the first place.

[SMOC]

All this will do is allow CX to say to new joiners that renting can be as low as $1300 p/m imagine the possibilities with the $10,000 you'll get. :ugh:

[Frogman1484]

I think we are in a serious bubble! When people are jumping in just because they are worried they will lose out. This is usually the last phase before it pops!

[Frogman1484]

Five Steps of a Bubble
Minsky identified five stages in a typical credit cycle – displacement, boom, euphoria, profit taking and panic. Although there are various interpretations of the cycle, the general pattern of bubble activity remains fairly consistent.

Displacement: A displacement occurs when investors get enamored by a new paradigm, such as an innovative new technology or interest rates that are historically low. A classic example of displacement is the decline in the federal funds rate from 6.5% in May, 2000, to 1% in June, 2003. Over this three-year period, the interest rate on 30-year fixed-rate mortgages fell by 2.5 percentage points to a historic lows of 5.21%, sowing the seeds for the housing bubble.

Boom: Prices rise slowly at first, following a displacement, but then gain momentum as more and more participants enter the market, setting the stage for the boom phase. During this phase, the asset in question attracts widespread media coverage. Fear of missing out on what could be an once-in-a-lifetime opportunity spurs more speculation, drawing an increasing number of participants into the fold.

Euphoria: During this phase,caution is thrown to the wind, as asset prices skyrocket. The "greater fool" theory plays out everywhere.

Valuations reach extreme levels during this phase. For example, at the peak of the Japanese real estate bubble in 1989, land in Tokyo sold for as much as $139,000 per square foot, or more than 350-times the value of Manhattan property. After the bubble burst, real estate lost approximately 80% of its inflated value, while stock prices declined by 70%. Similarly, at the height of the internet bubble in March, 2000, the combined value of all technology stocks on the Nasdaq was higher than the GDP of most nations.

During the euphoric phase, new valuation measures and metrics are touted to justify the relentless rise in asset prices.

Profit Taking: By this time, the smart money – heeding the warning signs – is generally selling out positions and taking profits. But estimating the exact time when a bubble is due to collapse can be a difficult exercise and extremely hazardous to one's financial health, because, as John Maynard Keynes put it, "the markets can stay irrational longer than you can stay solvent."

Note that it only takes a relatively minor event to prick a bubble, but once it is pricked, the bubble cannot "inflate" again. In August, 2007, for example, French bank BNP Paribas halted withdrawals from three investment funds with substantial exposure to U.S. subprime mortgages because it could not value their holdings. While this development initially rattled financial markets, it was brushed aside over the next couple months, as global equity markets reached new highs. In retrospect, this relatively minor event was indeed a warning sign of the turbulent times to come.

Panic: In the panic stage, asset prices reverse course and descend as rapidly as they had ascended. Investors and speculators, faced with margin calls and plunging values of their holdings, now want to liquidate them at any price. As supply overwhelms demand, asset prices slide sharply.

One of the most vivid examples of global panic in financial markets occurred in October 2008, weeks after Lehman Brothers declared bankruptcy and Fannie Mae, Freddie Mac and AIG almost collapsed. The S&P 500 plunged almost 17% that month, its ninth-worst monthly performance. In that single month, global equity markets lost a staggering $9.3 trillion of 22% of their combined market capitalization.


Read more: 5 Steps Of A Bubble (http://www.investopedia.com/articles/stocks/10/5-steps-of-a-bubble.asp#ixzz2KOo90KZR)

[cxorcist]

Old news. Pretty sure everyone's aware of what a bubble is. Boring... yawn:zzz:

[Tornado Ali]

....everyone is certainly aware of what a bubble is....problem is that very few see it and act in time before it pops. HK is certainly in a bubble. When it pops it will be epic. Discussing it will at least help a few clear their heads and act in time before it's too late. Cxorcist probably will still be thinking it's boring as the world comes down around him. I was there in 97....everyone thought it would go on forever.

[cxorcist]

A correction in the HKG housing market is NOT going to cause the world to come crashing down. That is unless, of course, you are one of the geniuses who bought into this rally over the last couple years with big down payments. Then it really will feel like the world IS coming to an end, but only for you and those in similar boats. For the rest of us, popping the bubble will create buying opportunities.

WRT '97, that is exactly the point. It did not go on forever. In fact, it turned around rather quickly. What indications are there that "this time" would be any different?

The long term pain for Hong Kong could be when the PRD region stops being a huge exporter because it cannot compete with western China and other SE Asian labor markets in the production of goods. That's when the economy will have to transition away from goods towards services. Hopefully that transition will be a smooth one.

I think the struggles ex-HKG in the air cargo market are evidence that this process has already begun. It will continue to do so, and CX will be increasingly reliant on connecting cargo through HKG. Hence, we have that expensive, new cargo terminal. Swires aren't stupid! At least not the ones outside FOP:ouch: