The government should use every means at its disposal to encourage an increase in property prices, Tung Chee-hwa told legislators yesterday. The property market was of paramount importance to economic revival, and to easing the budget deficit, he said. 'The stability of the property market is very important for us to resolve the budget deficit,' the chief executive said. 'In the interests of Hong Kong as a whole, we have to use all our energy and try our best to stabilise the property market, to let it have a chance to go up.' He acknowledged the Housing Authority could face financial difficulties from the freeze on the sale of Home Ownership Scheme flats, but said that nothing was more important than reviving the economy and helping people with properties in negative equity. His comments came a day after Secretary for Housing, Planning and Lands Michael Suen Ming-yeung announced more steps to tighten the supply of new flats. Mr Tung told legislators the city's economy was gradually picking up, mainly because of the implementation of individual travel for mainland visitors to Hong Kong and the signing of the Closer Economic Partnership Arrangement (Cepa) with the mainland. The stabilisation in the unemployment rate, which stands at 8.6 per cent, rising output and higher consumer spending were all positive signs of the improvement in the economy, he said. Some legislators expressed concern about how the government planned to take advantage of Cepa to develop the local economy and help clear hurdles for professionals to work on the mainland. Mr Tung said the government would continue working with different sectors to explore ways to tap into the mainland market, and would reassess the impact of Cepa on land use, labour and the economy of the special administrative region. He said many foreign companies had expressed an interest in establishing branches in Hong Kong in view of the potential economic benefits brought by Cepa. In response to a question from Liberal Party legislator Sophie Leung Lau Yau-fun - who represents the textiles and garment constituency - about the government's stance on the setting up of a tax-free industrial zone, Mr Tung said the government was following up the idea.