Bubble risk still real

Property agents held a protest on Sunday, urging the government to end, as soon as possible, anti-speculation measures designed to cool the red hot property market.

The fact is Hong Kong is still faced with a property market bubble and needs the restrictive measures to prevent it from bursting. Although the curbs make life somewhat harder for real-estate agencies and agents at the moment, lifting them would allow the market to run away again and may inflict greater losses on ordinary residents as well as agents and investors when the bubble bursts.

On the other hand, as interest rates may rise and the property market falls in future, the government is better off listening to the views of the real-estate industry and reviewing the effectiveness of the cooling measures to make sure they will be lifted in time to maintain market stability.

Statistics show that transactions of first- and second-hand residential units have remained low since the cooling measures were imposed last October. The sharp drop in sales has stopped price rises noticeably, resulting in a widespread drought of offers on the market that saw as many as eight agents compete for one single deal.

Little wonder property agents are feeling the pinch right now, but the suffering could be much worse and widespread in the event of a real-estate bubble burst, similar to that of 1998 following the Asian financial storm, which completely knocked out Hong Kong's property market, leaving tens of thousands of people bankrupt.

Many market indicators show that residential housing prices have risen against market trends in recent months, which means the market is still at risk of unwarranted turbulence, and the anti-speculation curbs should not be removed just yet.

The demonstrators voiced a number of demands on Sunday, such as the government adding "sunset terms" to the market-cooling measures for their sake. It's indeed necessary for the authorities to review the effect of the curbs to ensure they work the way they are meant to, not the other way around.

This is an excerpted translation of a Wen Wei Po editorial published on July 8.

(HK Edition 07/09/2013 page1)