HK developers' share prices show little reason to fear crash

Hong Kong

HONG KONG homeowners could be forgiven for fearing the worst. In a city notorious for its real estate booms and busts - including a 70 per cent tumble triggered by Asia's financial crisis in the late 1990s - property prices are once again sliding from all-time highs.

Yet, there's little reason to worry that the latest slump will spiral into another crash, if shares of Hong Kong's biggest developers are anything to go by. After a 34 per cent selloff from its June peak through Jan 21, the Hang Seng Properties Index has jumped 18 per cent in just two months - outpacing the broader Hong Kong equity market by almost seven percentage points.

The last time the property stock gauge reversed a drop of similar magnitude, in October 2011, home prices began climbing three months later. The index has been a decent leading indicator over the long term, too, foreshadowing turning points in the housing market 70 per cent of the time since 1994, according to data compiled by Bloomberg. While that's not a perfect track record, it does bolster the case of optimists who say the current slide in property values is just a temp…