Financial Secretary John Tsang Chun-wah yesterday warned of the risk of a property bubble, saying the price of flats had not fallen to a satisfactory level. SCMP, November 22 I congratulate our reporters on quickly sticking a pin into Tsang the Whiskered on this one. Five paragraphs down and they raised the obvious questions: How would you know what a satisfactory level is, Sir, and what are you going to do about it anyway? Answers to the above questions: (a) He doesn't know, and (b) Nothing. So now I'll make it my turn to point out a few developments of interest in the property market. We start with the financial secretary's own interest in it. He's minting money out of it as never before. As the first chart shows, the government's revenues from land auctions alone are now running at a record HK$60 billion a year. This is worth bearing in mind when you hear government officials moaning about property prices. All land in Hong Kong is public leasehold land and the government has a very direct interest in keeping prices firm. Thus I won't quite say it was crocodile tears dropping into that moustache the other day, but you know what I mean. Of more significance, however, and a source of greater potential trouble, is what the second chart shows. It gives you two property price indices, one for Class A flats, which means less than 40 square metres (430.55 square ft), and one for Class E flats, which means more than 160 square metres. Yes, I know, government has its 'A' to 'E' designations the wrong way round. 'A' should be for the big flats. Now don't be smart and tell me this isn't the only thing government has the wrong way round. Hah-hah, very funny. Back to that chart. Take note that these are price indices and I have based them to a value of 100 for October 2007. In other words, instead of taking direct measures of price per square metre, what we do here is make all prices equal a notional HK$100 in October 2007. We can then more easily measure how these prices have moved relative to each other since then. October 2007, is significant because it marks the turning point into the 2008 to 2009 financial slump. The Hang Seng Index peaked in October 2007, for instance. What the chart tells us is that this was also the month in which a long established trend in the property market reversed itself. For almost 20 years previously, luxury flats had risen more in price per square foot than shoebox flats. Since October 2007, however, it is the shoebox flats that have registered the greater price rise. As of September this year, they were up 82 per cent from the October 2007, level. The luxury flats were only up 40 per cent, less than half the gain. The obvious problem for Mr Tsang here is that he can always shrug off a price increase in luxury flats. Not only do these flats represent just a tiny fraction of the market but he can tell everyone to great satisfaction that the rich ought naturally to pay more. Most of these luxury flat buyers are corrupt crooks from across the border anyway. Serves them right if their prices go up while ours stay down. John Whiskers won't say this, of course, but the rest of us can. It's a different matter, however, when things are the other way round, when prices are rising faster for the sorts of flats that struggling working people live in. He can't shrug that off. To make things worse, the recent data says prices for luxury flats are indeed falling, but they are actually still rising for shoebox flats. Yes, I quite agree, there is something not quite satisfactory here.