Home prices drop: United States vs. Hong Kong

Hong Kong wins:

Source: United States – Case-Shiller Home Price Index (10-city composition)
Hong Kong – Centa-City Index (3-month moving average)

I thought it might be fun to see how the home prices movements in Hong Kong and United States look like after the peak. It turns out that the situation in the United States is really nothing compared to Hong Kong. As you can see, I have rebased the beginning to 100, and the lowest point of the 3-month moving average of the Hong Kong Index was 31.71, that means the home prices in Hong Kong dropped almost 70% in 6 years (!).

The interesting thing is, there was not a single bank which failed. And ironically, HSBC (HSBA.L, 5.HK) did not get burnt after 1997 even it has significant exposure to Hong Kong market, but it got seriously burnt in the US subprime market, which ended up asking for money from shareholders in a £12.9bn right issue.

Take home messages: 1. Perhaps the regulators in the United States did not do their job well; 2. The one in HSBC who was responsible (John Bond?) for the acquisition of Household International did not do his job well.

Question: will home prices in the United States drop more so that it will end up dropping 70%?

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About Zarathustra

Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.