Editorial﹕Too early to talk about easing property market tough measures

【明報專訊】THE property market is cooling down. The official housing price index has fallen for two consecutive months. Some market participants think that the property market is turning around and demand that the government ease the tough measures. Over the past ten years, property prices in Hong Kong have more than doubled. People in Hong Kong simply cannot afford to buy flats anymore. The fall in property prices in the past two to three months has not been significant. Any reckless talk about easing the tough measures at this stage will only send the public a wrong signal. Instead of easing the measures immediately when property prices fall, one should look at the original purpose of the tough measures before talking about easing them. The government should manage market expectations by being scientific and transparent about how decisions are made on when and how to ease the measures. It should also explain the specific indicators and factors that will be used to decide when is the best time to ease the measures and state clearly that the government will not be pressurised by the industry into making any decisions.

Hong Kong's economy has been "hijacked" by the property market. Any drastic fall in the property market will undoubtedly affect Hong Kong's economy. However, it does not mean that the government must prop up the market whenever property prices fall. It is necessary to get back to basics whenever there is any discussion about easing the measures. In view of the property market's upward cycle, the government has introduced counter-cyclical measures many times over the past nine years. These measures include tightening mortgage rules substantially and introducing the Special Stamp Duty and the Double Stamp Duty. After the financial tsunami, many countries were printing money to stimulate their economies. This resulted in the overflow of hot money and asset bubbles around the world. This was why the government introduced the counter-cyclical measures in the first place. However, apart from speculative activities, a more important reason for soaring property prices is the serious shortage of housing.

The recent downturn of the property market is mainly due to the Sino-US trade war, foreign stock market fluctuations and Hong Kong's prime lending rate being raised for the first time in 12 years. The downturn has not been due to any fundamental changes in the imbalance between the demand for and supply of housing. Should the trade war abate soon, market sentiments will improve and it is possible for the property market to stop falling and stabilise soon. Unless the market experiences a crash-like fall, the government should not consider easing the tough measures substantially because it may give the market a wrong signal and result in the property market heating up again.

Introducing a new measure is easy; lifting it is hard. It is never easy to identify the right moment to lift a measure or withdraw from the market. The key is to have proper criteria, indicators and procedures so that the market and the public can be sufficiently prepared psychologically. There must also be a set of indicators. The government must not make any decisions simply based on how it feels or because of pressure from the industry.

Regarding when and how the tough measures should be eased, instead of only tracking property prices, the government can consider a series of indicators, such as the number of negative equity cases and the housing affordability ratio (i.e. the ratio of mortgage payment to median income of households). To be able to respond flexibly, it is hard for the government to put down in black and white what the conditions and indicators are for easing the measures. However, to manage market expectations and prevent any wild guesses or speculation, the government may explain to the public the overall direction it will take. What the government must not do now is to ease the measures rashly and encourage the public to enter the market when the market trend is unclear and the interest rate has begun normalising.

明報社評2018.11.22﹕樓市減辣言之尚早 政府須有科學準則







drastic﹕extreme in a way that has a sudden, serious or violent effect on sth

prop up sth﹕to help sth that is having difficulties

wild﹕not carefully planned; not sensible or accurate

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