Concrete box ‘possibly not worth HK$23mn’ shock horror

The news media sometimes deliver grievous and heartbreaking stories that shake us. It might be an elderly and infirm woman beaten senseless by thugs, or the plight of a starving orphaned infant refugee. Or, in the case of Hong Kong’s Standard, the man who has to cut the asking price of his property to sell it. A Tai Koo Shing apartment, the paper painfully reports, went for 24% less than a similar unit the week before.

Lest we get overly depressed, the story ends on a cheery note. A senior manager at Sun Hung Kai Properties assures everyone that silly little stock-market swings (like the trifling one you probably missed yesterday) mean nothing. He adds that ‘more people’ have had the tremendous foresight to move their money out of stocks and, in the blink of an eye, put it into real estate, because home prices are bound to carry on zooming up and up, forever.

Could this be the same Sung Hung Kai Properties that is offering special discounts and waivers on repayments – of the sort that suggest desperation to shift inventory – on a new development at Tung Chung?

Yes it could!

According to a little bite-size morsel tucked away in the South China Morning Post, Chief Executive CY Leung ‘hits back at critics of his call for proactive government involvement in the market’. Since no-one has a clue what his ‘proactive’ measures would be, it seems a pointless debate. But some commentators suspect he wants some sort of 1970s Korean-style industrial policy of picking winners, and even some of his own officials have distanced themselves from his remarks.

He now justifies the ‘proactive’ whatever-it-is as a response to market failure, such as moves to ‘curb property speculation’. The problem here is that these measures – extra stamp duties – have themselves failed.

If he had been serious about minimizing the real-estate bubble, he would have barred non-residents from buying Hong Kong residential property and introduced punitive taxes on empty homes. (We know this would work because of the deafening squeals from those who insist it wouldn’t.) But of course this would have cut developers’ profit margins, or ‘damaged our reputation as a free market’, as opponents like to phrase it. Now, his administration is reduced to sitting helplessly, wondering what Xi Jinping or Janet Yellen might do next, and waiting – fearing property prices rising further, fearing property prices staying where they are as the least affordable in the world, and fearing property prices falling.