A new report by Salomon Brothers blames government ineptitude for creating a residential property crisis it claims will take three to five years to eliminate. On Wednesday the Government adopted a range of steps proposed by the Real Estate Developers Association to curb speculation in the residential market, but many believed the measures were too little, too late. Salomon property analyst Michael Green said in a report that 'a cocktail of social frustration and an undermining of the pillars of Hong Kong's unique property-orientated economy are in the making'. Mr Green said it was an 'unavoidable fact' that the residential market was in crisis, given that supply was well short of demand, prices high and speculation rife. He was in no doubt about the origins of the problems. 'The major cause of the shortage is the ineptitude of Government planning,' he said. Authorities had failed to recognise the need to keep a strategic land reserve in hand - a proposal made as far back as 1990, he said. Mr Green said a planning shortfall on the part of the Government was due to a 'slavish following' of a 1991 population census - rather than looking to adjust for obvious population changes. 'In our opinion, this is an incredibly basic error,' he said. The Salomon Brothers analyst published a report in 1995 - which attracted media attention - predicting an imminent critical residential supply shortage. Government officials responded through the press by assuring Hong Kong people that supply levels were adequate, Mr Green said. He has blamed Government bureaucracy for slowing down the rate of construction approvals for consents to commence work. These consents fell to their 'lowest levels in recorded history', at a time when there was a 'greater urgency for residential accommodation than there has been since the mass immigration of the Cultural Revolution in China'. A requirement that there be a 30 per cent down-payment for mortgage loans was 'probably necessary at the time of implementation', but subsequently contributed to speculation as 'a structural feature of the market'. Mr Green argues in the report that the implementation of a mortgage corporation to deal with the territory's residential financing needs was 'overdue'. 'The failure by the Government to have established such an organisation earlier on amounts at the very least to a failure of anticipating the needs of Hong Kong,' he said. In any case, this would only be a start to the solution of the territory's residential difficulties. 'What is really needed is a comprehensive residential and property strategy for Hong Kong,' he said. This approach needed to be 'comprehensive, detailed and flexible enough for various strategies', he said. A key feature of this strategy should be to create and maintain a strategic land reserve. To prevent instability, it was desirable to increase 'direct co-operation between the larger property developers, larger banks and the Government'. This would allow the release of finance with the sale of developments and the seasonal factors which influenced the market, he said.