Do we need to make property prices 'politically correct'?
There’s nothing wrong about anyone’s interest in popularity, in a society or in a company, but if you focus too much or even get addicted to it, there may be some side effects.
Let’s talk about property prices.
I am not a property industry expert but as a writer and reader, honestly speaking, I can tell nowadays in both Hong Kong and Mainland China, anything related to property prices has become more and more a political issue than simply a supply-and-demand market matter.
Analysts at Credit Suisse apparently agree with me on this view.
“While we believe it is politically correct for the (Hong Kong) government to be seen as introducing short-term measures to tame the property market, we believe measures would not have much impact on property demand,” said the bank’s research analysts Cusson Leung and Joyce Kwock in a recent report for the bank’s clients.
Politically correct? How correct can politics be these days in Hong Kong and Mainland China?
Local media in Hong Kong often describe Leung Chun-ying, a property consultant-turned politician and now the city’s chief executive, as a person who cares about his reputation and popularity among Hong Kong people the most.
Of course, there’s nothing wrong about anyone’s interest in popularity -- in a society or in a company -- but if you focus too much or even get addicted to it, there may be some side effects.
My colleague Tom Holland, a long-time columnist for the South China Morning Post, wrote in one of his recent columns that the so-called “Hong Kong homes for Hong Kong people” initiative announced by Leung in September would make zero material difference either to the affordability or to the availability of housing in the city.
When we talked privately to many analysts and even some officials on the mainland, they often agreed with Holland’s view that Leung’s “Hong Kong homes for Hong Kong people” initiative was more like public-relations campaign rather than a real and strong action to hit the key point.
When Leung’s government announced this initiative to limit the non-local to buy properties in the city, I remember many of my friends in Shanghai and other mainland cities joked about the policy online.
One posting said: “Now, we are the same,” referring to the limits on property purchases in many mainland cities, where local governments were forced to heed Beijing’s orders to curb fast-rising property prices, which the government sees as a growing threat to social stability in recent years.
But after all, China is not yet a fully market-oriented economy, while Hong Kong's reputation as a bastion of the free market dates back for decades.
So, what’s the key point here? In the research report by Credit Suisse, the analysts said: “The only real effective government measure would be to ensure sufficient land to maintain a sustained elevated level of residential supply.”
Indeed, the government has rolled out some mid- and long-term plans to add supplies of lands and now the question that cannot be easily solved is time. Property is a special kind of goods. It’s not like an iPhone, where Apple can quickly increase or decrease available supplies. Properties take years from land purchase to the moment when people can move in.
How long? In the case of Hong Kong, most analysts believe there’s a time lag of four or even five years and that may explain why the Credit Suisse report concluded Hong Kong's property prices just could not fall anytime soon.
George Chen is the financial services editor at the South China Morning Post. The opinions expressed in the column Mr. Shangkong are all his own. Follow him on twitter.com/george_chen or weibo.com/georgeschen
Disclaimer: The author of the column is a property owner in Hong Kong and Shanghai. The author doesn't own stocks of any listed property companies.