If you have been a regular reader of the local news media, you, like many other readers, might have been misled into thinking that the local property market had crashed.

Nothing is further from the truth. The latest authoritative survey shows that the property price index has dropped an aggregated 9 percent in the past four months from the peak built up in the past couple of years.

That is clearly a sign that the market is going through a long-overdue adjustment rather than a rout, which exists only in the wishful thinking of the many underpaid editors and reporters of Hong Kong's notoriously stingy local media organizations.

As is well known to most people, the property price adjustment was triggered late last year by the impending interest hike in the US. Although worries about further interest rate hikes have subsided, the prospects of the property market continue to be clouded by the economic slowdown, which could lead to falling wages and rising unemployment.

This has led many property developers and real estate agents to call on the government to lift the market-cooling measures introduced several years ago to stimulate investment in property. The argument, supported by some economists, is that a thriving property market can benefit the economy by helping boost domestic investment and consumption.

The risk is that a property market boom that is not underlined by robust economic growth could quickly turn into a calamitous bust, triggering a financial crisis when more and more home owners are either unable or unwilling to pay back their mortgage loans.

The Hong Kong financial authorities are right in resisting pressure to lift the market-cooling measures at this time. There is no indication of excessive price adjustments in the current phase of the market down cycle. It is best to allow the process to work through without undue government interventions.

(HK Edition 03/02/2016 page8)