Property stocks, as earlier predicted in this column, have rebounded by an average of about 20 percent from their lows in the past few weeks.

Taking the cue from the US Federal Reserve, which decided to hold the benchmark interest rate at the current level, several major Hong Kong banks, including HSBC and Standard Chartered, have narrowed the spread of mortgage rates to 1.6 percentage points above the rate at which banks lend to each other.

One may interpret these moves as a sign that the property market downcycle has run its course and prices will stabilize in coming months. Not so, according to the two most respected doyens of the industry - Li Ka-shing of Cheung Kong and Lee Shau-kee of Henderson Land.

Both tycoons had predicted in the past week that the market still has a long way to fall. So far, average homes prices have dropped by some 15 percent from their peak in the middle of last year. Lee said prices can be expected to tumble by another 15 percent in coming months, while construction costs would stay firm.

The two super-rich property magnates have been lionized like elderly statesmen who are widely believed to be as wise as they are rich. When they speak, people listen.

And, what they say have many people worried. It's extremely rare for property titans of their caliber and status to express such pessimism about the market openly. The dark picture they've painted has greatly added to the pressure on the government to review its housing policies that tend to push down real-estate prices.

Despite repeated calls by developers and property agents, the government has refused to lift the controversial measures introduced several years ago to combat escalating prices that are said to have denied many Hong Kong people the chance to buy homes. The government defended its position by insisting that the property market downtrend has remained moderate, suggesting that the decline in the past few months has done nothing more than bringing prices to more economically sustainable levels.

If prices continue to fall as the property tycoons have predicted, it's questionable if the government could still hold its line while sticking to its plan to drastically increase housing supply.

(HK Edition 03/24/2016 page7)