Market calls for flexible flats target
It seems ironic that pro-grassroots Executive Councillor Tam Yiu-chung should suggest the Government review the target of building 85,000 flats annually while his pro-business colleagues in the inner-cabinet reject such a need.
Over the weekend, Mr Tam suggested that given the gloomy state of the property market, the Government should review whether the housing target should be adjusted. His remark surprised many and prompted suspicion that the unionist was testing public reaction to a potential turnabout in Chief Executive Tung Chee-hwa's housing policy. But an official and Mr Tam's Exco colleagues, Sir Sze-yuen Chung and Leung Chun-ying, swiftly rejected such a call, leaving the impression the unionist's view was no more than a personal opinion.
Regardless of whether Mr Tam's suggestion is a calculated remark, or whether he is only reflecting public views to Mr Tung, or that it is indeed his personal assessment that a review is worthwhile, it points to doubt over the Government's building target.
Many people have suffered badly from the high housing prices and hope they will come down. Most understand that the best scenario is for the market to have a soft-landing.
Unfortunately, the financial turmoil in the region quashes those hopes: instead of prices dropping gradually, the market has been flattened.
Prices in some places have gone down by as much as 40 per cent since the October stock market crash. No one knows when the downward spiral will ease. Worse still, transactions appear to have come to a halt because of the uncertainty in interest rates and the banks' tight lending policy at present. With all these bad news, it is not surprising people have started to wonder whether the Government's housing supply target is still realistic.
For the Government, this is a difficult question: how can Mr Tung, having only announced his grand housing plan for six months, suddenly change his target? Will that affect people's faith in his determination to tackle the housing problem and undermine his credibility? Naturally, Mr Tung will resist the pressure to change. However, if the economic uncertainties linger, he may find that no matter how hard he tries to defend the target, it will become irrelevant.
Does the figure reflect reality? With the financial turmoil, will people still be able to afford the purchases? Defending the target, Sir Sze-yuen claimed many people still had nowhere to live. This is nonsense. The truth is that Hong Kong people are basically fully housed and the demand for flats is largely generated by people's aspirations to improve their quality of living or to preserve the value of their money.
Over the past six years, buying property has been a guarantee for wealth. But the financial turmoil has taught many people a lesson - property prices will not go up forever; buying may suddenly translate into a huge burden of monthly interest payment; and unemployment is not a monopoly of the blue-collar sector.
Hong Kong people will take time, perhaps a long time, to recover from the shock of the present financial turmoil. The urge to buy is sure to diminish and people will also be more cautious in their home-purchase plan.
Setting the housing target is not a simple question of mathematics. If people's home-buying aspirations change, standing firm on the target is meaningless - we will end up with more flats than we need.
If market conditions have indeed shifted drastically, it is important that the Government remains responsive.
Failing to do so is like taking away a key factor that makes Hong Kong tick.
Is that what the Government wants?
