Beijing's the big property player
I HOPE the Finacial Secretary, Mr Hamish Macleod will demonstrate that in some situations bureaucratic resistance can work to the community's advantage.
The Real Estate Developers' Association (REDA) has mounted a campaign against Mr Macleod to raise the mortgage lending ceiling guideline. REDA seldom goes public to voice its concerns and whenever it does one can be sure that property developers and speculators are seriously worried.
As I recall it is over 10 years since they let it be known to the media that they were seeking an interview with the Financial Secretary or the Chief Secretary to express serious concern.
At that time the problem was that imprudent lending by the banks had enabled developers to create a huge pool of empty flats which they and speculators had priced well beyond the means of home buyers.
Rather than let consumers benefit from a freefall in the prices of flats that non-intervention would have brought banks were encouraged to enter the home-loan business and shift the financial liabilities incurred by the developers on to Hongkong's increasingly affluent middle class.
This typical Hongkong compromise which saved the property companies, the banks and stabilised prices at a satisfactory level pleased almost everyone.
It would not make good sense for the Government to make a similar compromise with REDA today. For at the root of the sluggish market has got to be a growing conviction that China's irrational and menacing reactions to Mr Patten's constitutional package cast serious doubt on that country's reliability in respecting individual property rights or the law of contract after 1997.
Since China is now a major player in the Hongkong property market REDA should seek out the creators of all our present trouble in Beijing and talk self-interest and common sense into them, rather than try to bully Mr Macleod into making compromises that will please REDA's members but foster false optimism about the future.
JOHN WALDEN Pokfulam
