Warning on property plunge

HONGKONG Bank said yesterday that the Government should not try to bring down property prices too quickly.

Hongkong Bank executive director Paul Selway-Swift said at yesterday's opening of the Hong Kong Gifts and Houseware Fair: ''It is irresponsible for any government to drive property prices down quickly.

''It would mean that house buyers who bought a flat with their life-savings suddenly find the value of their property dropping.

''I have concerns about anything which might disturb the current demand and supply situation.'' Also, Mr Selway-Swift said: ''Major companies making huge commitment to buy old property to redevelop will suddenly find the value of that land falling.

''The government must be careful that they moderate things and not just send things down quickly,'' he said.

However, he welcomed the government's move to cool the property market in the long-term, to make residential and commercial property more affordable to individuals and smaller companies.

''On the other hand, it would be good if we could stop the market from going up.

''What I would really like to see is a six-month period of stability where there is zero growth in property prices,'' he said, adding that the market would ''just calm down'' after that period.

''That is probably the sort of thing that the government is trying to aim at as well,'' Mr Selway-Swift said.

Such a move would be in every one's interest as prices would be prevented from going up and no one would be hurt.

Mortgage business remained strong with high demand for residential mortgages, he said, and added that the bank did not have any specific plans at the moment to tighten up further.

However, he cautioned that the situation might change if the market went up further.

''But you never know. If it goes up further, we may well have to tighten up.'' Any further tightening might involve properties that cost less than $5 million, Mr Selway-Swift said.

''People should not discount the fact that we may have to tighten up at the lower end of the market.

''But we will just have to wait and see.

''If it becomes necessary for us to move, we will move.''