Protect Hong Kong residents with dedicated property market
According to chief executive-elect Carrie Lam Cheng Yuet-ngor, “ it may not be feasible to suppress” property prices (“Efforts to curb high home prices fail, Lam admits”, April 2).
She said “doing so further will have side effects”. She pledged to tackle the issue with a “starter home” scheme and get developers to build more public housing estates.
Her assessment is certainly correct and while her idea to build more public housing is not entirely new, it is nevertheless the right way to go forward.
However implementation takes time and developers may not be very keen to see it happen sooner rather than later for obvious reasons. In the meantime, prices keep rising, housing becomes even less affordable and Hong Kong citizens become more frustrated with their living conditions. This is not exactly the recipe for bringing back harmony to our city.
In an orderly market, prices are established as an equilibrium of demand and supply. But Hong Kong is not an orderly market to the extent that locally earned and taxed money has to compete with a “tsunami of hot money” from external sources. Yet, if price controls will never work over time, why not create a fairer market?
Let Hong Kong residents compete against each other and non-residents do the same. In other words : non-residents can’t buy local property. The exception will be non–residents can buy a property which is already owned by a non-resident, provided that no local resident is willing or able to pay the same price as the potential non-resident buyer.
We segregate the property market with a market for residents and a market for non-residents. This is free competition among equals. No government interference, and demand and supply according to affordability will set the “right price”. In certain circumstances (for example, “flipping”), a special tax for property speculation may also be warranted.
These should be seen as temporary measures until and when the supply of new public housing and other residential developments have been increased, and more affordable market prices have been established.
Wolf Peter Berthold, Central