By: Our Correspondent

Having observed this year’s
government land tender results, it seems the larger tracts, like always, have fallen
into the hands of leading developers or State-owned mainland developer (to
quote a few examples: a sizable Yuen Long lot went to Sun Hung Kai Properties; two
large Tseung Kwan O lots went to Wheelock Properties, two Kai Tak lots went to
China Overseas Construction). Owing to bidders being able to use nominee
companies (whose parent companies may also be nominee companies) in land
tenders, it is impossible to know from officially announced tender results who
actually got the other sizeable plots.

As for the land tender
prices, they are, as always, marked closely to the property market, where
prices have barely fallen from the historical peak. The palliative buyer stamp
duty and special stamp duty – the so called “piquant measures” – have so far only
managed to reduce property turnover, but hardly the prices. But already
property vested interests are nagging for a repeal of those measures, which
have been introduced for only a few months.

It would seem that my
earlier tinge of optimism about increased land supply being an effective impetus
to eventually bring property prices down to more affordable levels seems
misplaced. I unwittingly overlooked the crucial fact that the government and
the leading developers have never ceded their firm grip on land and property
prices, simply by virtue of their collective ownership of almost all of Hong
Kong’s buildable land. They have a common interest in keeping prices high,
though for different reasons. The former wants to maximize land sale revenue for
its fiscal health, so that it can continue to trumpet to the world that Hong
Kong has the unique advantage of a low-tax regime. The latter want to continue
to fatten themselves with development profits and rents. They are no different
from a clique of bakers who have monopolized the supply of wheat flour – they
naturally have the power to manipulate the price of bread.  

It is apparent that, as
long as the high land price policy that the Hong Kong government embraces with
all its life force remains intact, no matter how much land is released into the
market, it’s not going to have the desired impact on property prices, much less
on the entrenched status quo. History shows that every market dip in the past
was caused by an external event or internal chaos rather than an increase of
land supply (of course the property cartel would try to dupe the public into
believing the latter being the culprit). On the other hand, past experience has
taught many of the older generations (including civil servants) that their best
bet is “if you can’t beat them, join them”. Such an attitude towards buying and
owning properties has been institutionalized over the years, and is deeply
embedded in the social consciousness. Naturally, homeowners would want to see
prices stay up, whose expectation can be self-fulfilling. Homeowners would
rather use all their savings to buy more flats for their offspring than see
property prices fall significantly for the greater and long-term good of
society.

The only problem is, at
least some clear-thinking and independent youngsters and individuals who have a
sense of justice are finding that this game only favors those already with
capital (equity in homes) and is grossly unfair to those without at the
starting point. They can see that Hong Kong’s addiction to properties is stifling
healthy innovation and creativity, the lack of which is taking a toll on its
economic development. For those who are grassroots and those who by a stroke of
bad luck have slipped onto the lower social echelons, living in decrepit sub-divided
flats as well as enduring bitingly high rent is their only option until
subsidized flats become within reach, if they ever will. These unfortunate
have-nots, along with the haves, all need to pay a lot more than would have
been necessary for their daily needs and consumer goods because of obscene
rents.

The SAR government’s vacuous
vows to increase land supply or to search for more land to build affordable
flats are at best a feckless attempt to teach guileless Hong Kongers simple Economic
theory about supply/demand equilibrium, and at worst a red herring aimed at
diverting the public’s anger away from its perpetual collusion with the
property cartel (which should now include powerful mainland developers).

Thus, CY Leung and his
administration, knowing full well that the Gordian knot to Hong Kong’s social
and economic ills (including the much condemned wealth gap) lies in the government’s
high land price policy, its addiction to financing itself with land revenues
and the regressive tax system but lacking the courage to touch them, can only
put “band-aids on top of band-aids”, as one internet commentator jeered. At the
same time, society’s institutionalized belief in the magic wand of properties
is providing good excuses for inaction on government’s part.