Officials caused property crisis

PUBLISHED : Saturday, 09 March, 2013, 12:00am
UPDATED : Saturday, 09 March, 2013, 2:31am

Repeated interventions in the Hong Kong property market by officials, particularly former chief executive Donald Tsang Yam-kuen and Financial Secretary John Tsang Chun-wah, have caused havoc for ordinary Hong Kong citizens.

First, Donald Tsang curtailed land supplies and instituted the land application system which favoured the large property developers.

The government then allowed mainlanders to flood into Hong Kong and seek residency by investing in property, pushing up demand. Meanwhile, the renminbi has appreciated against the Hong Kong dollar, importing inflation, and our property market has become a magnet for mainlanders, investors and speculators alike.

Meanwhile, officials have refused to reconsider the Hong Kong dollar peg, at the behest of property developers, who benefit from frequent boom-bust property cycles. A stronger Hong Kong dollar would help lower inflation and provide a natural tightening in the US Federal Reserve's loose money policy phase, helping to restrain the property market. This has not happened as the government continues to defend the peg.

Now, with a hot property market, more government intervention is the answer by John Tsang, imposing punitive stamp duties and increasing down payments for mortgages on buyers to curtail demand, causing transactions, but not the upward trend in prices, to slow down. Meanwhile, residential and shop rents continue to soar.

Past government intervention (to curtail land supply) has led to current measures (to suppress demand and increase supply). This will no doubt cause future intervention when the property market eventually crashes.

The problem is that successive governments have maintained a high land price policy, which has been a punitive tax on average citizens as the property developers simply pass on the costs to buyers.

Today, Hong Kong has the dubious distinction of being the world's most expensive property market, with the highest wealth gap, with the majority of its residents struggling to make ends meet. This mess is a direct result of poor administration and conflicts of interest of key officials paid enormous salaries and benefits. Meanwhile, the government's coffers are bulging with surplus money and the property developers are laughing all the way to the bank.

Who is ultimately accountable to the Hong Kong public for this mess? My message to John Tsang is, please stop running Hong Kong like a property developer seeking to maximise profits at the expense of the SAR's citizens.

Sanjiv Singh, Mid-Levels