For most people, the biggest investment they are likely to make in their lifetime is the purchase of a home. Despite the likelihood of this overshadowing the ownership of any other single asset, there is considerable confusion between home ownership and property investment, a confusion rather remarkably shared by Hong Kong's chief executive, as revealed in his recent policy address.
The problem with confusion like this is that it leads to fuzzy thinking about investment, which can give rise to undesirable consequences.
It is no exaggeration to say that in Hong Kong, interest in property prices often rises to the level of obsession and that practically everyone seeks to be a player in the property market.
Fortunately, those seeking to be players by buying their own homes in Hong Kong are less likely to face the fate of homeowners in other places who have been forced into bank repossessions of their properties. This is because the city's banks are much tougher lenders and raise the bar on home purchase borrowing to an extent that excludes a substantial part of the population.
However, those who are able to borrow do so not just to secure a place to live, but also in anticipation of increasing values, an expectation based on Hong Kong's history. But unlike other assets, the sale of a home is almost always problematic.
This is why most homeowners have to think very carefully before trading their properties and are constrained from moving around in response to price fluctuations. Family homes are often tied up with proximity to schools or relatives, and disposing of the place can also mean disrupting these arrangements. Moreover, they need to factor in the costs of moving and redecoration as part of the profit and loss equation.