Ailing property market needs more help
After the SAR Government took measures to rescue the local property market, it seemed to stabilise.
However, property prices in Hong Kong have plunged by 50 to 60 per cent since 1997. The property market is weak and is unlikely to make a swift recovery, with the present economic downturn and high unemployment rate.
The Government and banks have offered some financial assistance to negative-equity homeowners. While thousands will benefit from re-financing programmes, this will not lead to an improvement in the real-estate sector. However, I have two suggestions which might help.
First, the SAR Government should set itself two targets - for property prices to return to 1997 levels in 10 to 15 years, and for there to be slow but persistent growth from then on. If these targets were declared to be official policy, it would restore market confidence.
Second, the Government should implement appropriate measures to achieve reaching these targets. An administration can formulate and implement policies which influence the supply of a commodity and affect its price.
Hong Kong has experienced deflation and an economic slowdown. Any further reduction in property prices will hurt homeowners, and the economy as a whole.
However, if the Government adopts more effective measures to boost the real-estate industry, this will benefit the economy.
DAVID NG YAU-MAN