Dozens of buying rights at the East Point City development project at Tseung Kwan O changed hands on Saturday, which flew in the face of Financial Secretary Donald Tsang Yam-kuen's remarks that speculation was not yet prevalent enough in the middle to lower end of the property market to warrant intervention. He said the Government might hold off from dampening speculation.
Prices of most flats at East Point City range between $3 million and $4 million, which can hardly be categorised as luxurious. If scores of purchasing rights were traded as high as $430,000 each, what would Mr Tsang call it other than rampant speculation? The flip-flop is confusing, if not disheartening, particularly when Governor Chris Patten described early last week the situation as urgent. For people who were forced to pay an extra $200,000 to buy a $3 million flat at East Point City, what would they think? For potential buyers who are hoping their chances would not be usurped by speculators, their reaction to Mr Tsang's statements must be nothing but great disappointment.
The prices fetched in trading buying rights at East Point City pale those at a Homantin project earlier this month. The highest price paid was said to be $2 million. Surely, we hope, Mr Tsang was not taking the $2 million as a yardstick. Perhaps Mr Tsang was swayed by developers' proposals last Friday to initiate self-regulatory measures to curb speculation. They proposed to limit the percentage of purchases by shell companies to 15. Speculators often use shell companies to register and transfer them before the purchase and sale agreements are signed. While developers' self-restraint is welcome, it would not halt speculation. To solve the problem is to hit the nail by the head --imposing high taxes on speculative gains. That's something the Government must do now to enable the free market to operate without manipulation.
