In a letter to these columns on December 16 of last year, I predicted that if and when the Government tried to suppress speculation in the luxury housing market, speculators would move on to the mass market, causing many more problems.
I suggested that a capital gains tax was the only answer.
Sure enough the mass market rocketed after the new guidelines regarding lending for luxury housing were imposed.
With Tung Chee-hwa's government-in-waiting now considering new ways to tackle spiralling house prices, I again urge officials to consider capital gains tax/speculation tax, but make sure it is not too severe.
Some people think that increasing supply of housing will do the job. They are either naive, or they have a vested interest in keeping the housing bubble intact.
Imagine the enormous amount of liquid money available from overseas, the mainland, and also locally these days. Any amount of new houses and land can be easily absorbed by speculators and investors, as long as they do not have a better place for their money.