Come on kiddies, take away the speculators and see what develops

PUBLISHED : Tuesday, 01 February, 2011, 12:00am
UPDATED : Tuesday, 01 February, 2011, 12:00am

The whole of Hong Kong is at the mercy of real estate developers ... the government has not only slowed down the construction of public housing but also turned a blind eye to the speculative behaviour of real estate developers.

Youth group protest,
SCMP, January 31

What actually had these kids out on the streets was Chief Secretary Henry Tang Ying-yen telling them at a youth conference that they had best reconsider their activism or risk a fatal car crash.

I have my doubts about them too. What self-respecting kid would ever attend a youth conference? I wouldn't have been caught dead at anything of the sort when I was younger. This later generation is indeed sadly lacking.

But then I also can't understand why they bother with Henry. He is where he is primarily because his family hit the jackpot with garment quotas 40 years ago and he then chose (or was delegated) rather late in life to take up a career in government - 'It's down on Lower Albert Road, Henry. The driver knows.'

I'll give him his due. His idea of auctioning silly licence plates has allowed us all to see how surprisingly many buffoons there are in the ranks of the rich. Cars are his thing obviously, wines also. He is a man of conventional pursuits.

And our Donald has long had his measure. He made him chief secretary, an antiquated colonial post that no longer has any real purpose, and sends him out on odd jobs, government arborist, for instance - 'Tell us what trees to cut down, Henry. Off you go.'

So it's all really a case of much ado about nothing. The only reason I'm highlighting this complaint about developers is that it has become so common. Michael Chugani delivered a full half-hour of it on his Newsline show on Sunday night, too. His guest, legislator Lee Wing-tat, hardly had time to squeeze a word in.

I think it's a classic case of laying the blame for every discontent on a bogeyman. The whole of Hong Kong at the mercy of a handful of undistinguished developers? We really are a bunch of wimps. We may as well all go to youth conferences.

If we are truly at the mercy of anyone or anything in this matter of high property prices, then it is at the mercy of the Federal Reserve Board of the United States, which effectively dictates our interest rates through a formal peg of the Hong Kong dollar to the US dollar.

The Fed wants rates low to prop up a weak US property market undermined by earlier Fed negligence. Our own property market does not have such trouble. We thus have an economic dislocation from the US while still being joined to it by the peg, and the result is a frothy property market in Hong Kong.

If you want to blame anyone for this, blame earlier colonial government officials who mismanaged our monetary affairs and, as a price of rescue, had to surrender their monetary independence to the Fed in 1983. On this score, developers are guiltless.

The suggestion that government should speed up the construction of housing may not be a bad one but let's not have any pedal-to-the-metal speed here. That was our response the last time property prices surged in 1997 and the results were wholly unwelcome.

It is not possible to gear up a big increase in home construction overnight. As the chart shows, the big surge from 1997 only came through as completions in 2001, just in time to deliver another wallop to a property market already in free fall.

Shall we do it once more? Hands up now, all of you who would like to be in the middle of a wipe-out again. Hey, kids, put some money into it and let's see if you're really quite so enthusiastic then.

As to that bit about government turning a blind eye to the speculative behaviour of developers, long may government continue to do so. Development is by nature a highly speculative business and I have never yet encountered a developer who, if given the opportunity, would not indulge it to overbuild massively. That's how you get housing out of the ground, not through Donald or Henry speeches.

And here's the icing, kids. If you really don't like developers, you can always chuckle at their embarrassments on the way down again. You should have watched that Uncle Four fellow make a fool of himself that way three years ago. What a hoot.