C.Y. Leung's measures to cool property prices not enough
People who want to see tougher government measures to rein in the overheated property market must have been disappointed. Instead of tackling the problem with a cannon, the chief executive resorted to what appears to be a pistol. Judging from the positive reaction from the market yesterday, the package of measures announced by Leung Chun-ying does not seem to go far enough. There is a need for more effective measures to stabilise the market.
Public expectation that Leung will bring down skyrocketing property prices has been raised ever since the new leader made housing one of the cornerstones of his election platform. Unfortunately, values continue to rise, with prices and rents for medium-sized and luxury flats continually setting records.
It is encouraging to see that Leung is aware of people's grievances and has acted swiftly. While he deserves credit for the determination shown in taking on the challenge, the 10 initiatives are not forceful enough. Most of the short- and medium-term measures involve changing land use or tweaking housing schemes in the pipeline, such as putting the 1,000 flats under the My Home Purchase scheme up for sale instead of allowing people to rent, and then buy them, as planned. Yesterday, the development chief announced that six of the seven sites in the coming land sale programme were for residential use, and would provide 1,760 flats. But the supply of a few thousand flats in the next few years can hardly meet the strong demand. Inevitably, housing supply will remain a cause for concern in the longer term.
We appreciate Leung is walking a tightrope. On the one hand, pressure on him to honour the campaign promise is growing as property prices continue to spiral upwards. On the other hand, he has to avoid over-regulating the market for fear of undermining the interest of hundreds of thousands of property owners. The last thing he wants is to be accused of repeating the mistake of former chief executive Tung Chee-hwa, whose annual-flat-supply target of 85,000 was widely criticised for contributing to the property-price crash in 1998.
The ultimate goal for the government should be providing more affordable housing rather than suppressing property prices. Now that Leung has made a sensible and modest step to try to increase housing supply, he should continue to do more. If the package is found to be ineffective in cooling down the market, more drastic measures should be considered.