A Hyperbole

The headline of a local English newspaper “Hammered” would give one the impression that disaster has struck the Hong Kong property market. A Chinese newspaper editorial remarked that the lackluster response to yesterday’s land auction indicates that government’s recent cooling measures are having an initial effect on the overheated market.

After a wave of screeching blasts on government and developers for their respective culpable parts in the scorching property market, the media seem to have suddenly sounded a siren about an imminent market collapse. But it appears more like a hyperbole effort to help developers convince government there is no need to apply stricter rules, rather than a wish for prices to normalize out of genuine concern about home affordability.

According to the Standard news report, there were 16 bids coming from three bidders at the auction of the Tung Chung lot, and the final price was 19 percent over the reserve price – something much better than a “lackluster response”, and nothing nearly as negative as Standard’s shocking headline would suggest. The fact that the big boys like Cheung Kong and Sun Hung Kai stayed out of this auction signifies nothing more than their disinterest in a piece of poorly located land when they can opt to wait for more prime pieces to come along. If only for the sake of appearing to be cooperative with government on the cooling measures, just to delude officials into refraining from more harsh measures, they would have stayed on the sidelines any way.

As to whether the cooling measures are having any effect at all, isn’t it far far too early to tell, as they were announced just about a week or two ago?

Perhaps one can’t blame the media too much, as they have to care about their advertisement revenue, of which property ads income probably make up the bulk. Talk about economic control by the property barons!

Turning to the cooling measures, the most baffling one is the one requiring a property company’s directors and their families to declare purchases of that company’s flats while not requiring the company’s employees to do the same. The Tax Department should have a busy time targeting these groups to get them to pay profits tax!

In fact, all the cooling measures are nothing worth mentioning and are merely normal and fair contractual obligations on the part of flat vendors in normal flat purchase transactions. But things have been so outrageously abnormal in the property market that consumers now seem to ought to be tearfully thankful for being granted the right to access adequate information to make a home purchasing decision on, and for a less rigged transacting environment.

Yesterday I watched a TVB interview with the head of the Consumer Council about the cooling measures, and can’t help but agree with a phone-in guest’s comment: that the measures have no legal binding effect on the developers and as such, they would probably turn out to be futile. Even if the measures are ultimately legalized, how many consumers would have the means to fight the overpowering developers in case of disputes?