Monitor | The unintended consequences of Hong Kong's property policies
From 85,000 new flats a year proposed by Tung to the recent increase of stamp duty, our officials have achieved the opposite of what they wanted
Hong Kong officials invariably mean well. But it is uncanny how often government policies end up achieving not their intended effect, but the exact opposite.
Nowhere is this more true than in the property market.
Just consider the housing policy announced by the first post-handover administration. In a bid to boost his popularity, then chief executive Tung Chee-hwa promised to achieve a 70 per cent home ownership level within 10 years. To hit that target, he would back the construction of 85,000 flats a year by the public and private sectors combined.
In an overblown market that was already beginning to slide, it was exactly the wrong policy. Homeowners blamed the building plan for exacerbating the slump, and Tung's popularity ratings plunged.
Finally, in mid-2000, with home prices down 50 per cent, the government executed a U-turn, announcing that it had abandoned its policy. Instead of building, it would suspend land sales in an attempt to support the market.