THE Governor Chris Patten has recently indicated he agrees home prices in Hong Kong are too high. Meanwhile, Hongkong Bank's Paul Selway-Swift goes around echoing the words of the Secretary for Lands that prices should not be encouraged to fall because nobody wishes to see their assets dropping in value. So who is right? The Governor, of course. For too long property developers, aided by speculators, banks and senior civil servants, have pushed up house prices to absurd levels. If prices were to fall, the average home-owner would not actually be hurt. It makes little difference to him whether his home could be sold for $1 million or $10 million because he still needs the roof over his head. Bankers, property developers and speculators see this in a totally different light. They do not wish to see the apparently ever-increasing house price spiral deviated from its track in their quest for profit. Many senior civil servants also have their hands in this till. Some have been permitted to buy houses in Hong Kong with low-interest loans which are repaid not from their salaries but rather from generous housing allowances, all of which come from the taxpayer. Many of these beneficiaries aim to leave Hong Kong before 1997 with huge profits from the sale of their homes bought at public expense. If Mr Selway-Swift is so concerned about the Hong Kong public's assets, why does he not ensure that depositors receive a fair rate of interest on their bank savings? No, Mr Selway-Swift, property prices should now start tumbling, just as they did elsewhere. Speculators' fingers will be burned - and they deserve to be - as well as those of the banks. P. A. CRUSH Sha Tin THERE is one reason and one reason only for the speculator-driven increases in property prices. It is the Hong Kong dollar's peg to the United States dollar. To maintain this peg, the financial secretaries for the last 10 years have abandoned monetary policies, forcing banks to use interest rates to maintain the peg instead of controlling inflation. Today's interest rates are too low and have caused property price increases by making housing loans cheaper than they should be. Low interest rates have also deterred savings by depositors, making property a more attractive investment. Of course the Financial Secretary, Sir Hamish Macleod, desperate for someone else to blame, has pointed the finger at speculators. Sir Hamish should do the public a favour and admit the dollar peg is the real reason for the current property crisis and abolish it. SIMON PATKIN Kowloon
