The beleaguered property market faces a crucial test today. More than a month after Tung Chee-hwa promised to stop property prices from sliding any further, they are still in decline. Even further price cuts by developers have failed to stimulate interest. The queues of applicants that used to besiege new developments have been replaced by a dearth of buyers. In some cases, potential purchasers have been outnumbered by property agents, desperate for any business they can find in a collapsing market.
The exception has been Tierra Verde, the Cheung Kong development in Tsing Yi, which has still managed to attract some interest due to its convenient location, on top of one of the airport railway stations. Even then the number registering for the second phase, which goes on sale this morning, has shrunk to barely half the 6,686 who rushed to try to buy the first phase in late May.
If those registrations result in a sell out for the second phase today, then the property market may receive a slight boost. But if, as happened at other new developments, potential buyers shy at the last moment, leaving some flats unsold, prices are certain to fall still further.
Whatever happens, the Government must resist the temptation to intervene yet again. Its two previous rescue packages, first relaxing anti-speculation controls and then freezing land sales for nine months, have had only the most marginal effect in stabilising the market. There is no reason to suppose that further such measures would have any greater impact.
In any case, the Government has done as much as it should. Indeed, some argue it has already gone too far in its earlier interventions. Although the importance of property to the local economy means sharp price fluctuations are undesirable, it is simply not possible to stimulate demand that does not exist in a recession. Any attempt to artificially prop up the market will only store up further trouble for the future.
