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"Spicy" measures to stabilise the property market

Yesterday in his blog, the Financial Secretary appealed to Members of the Legislative Council (LegCo) to consider and pass the relevant bill as soon as possible after the summer recess to establish the legal status of the Government’s measures to stabilise the property market (commonly referred to as "spicy" measures).

Since the announcement of these measures in late October last year, the property market has gradually stabilised. The property fever has subsided and the demand for property from overseas and local investors and speculators has been suppressed, thus reducing the tremendous financial risk associated with an inflating housing bubble and its eventual bursting.

The Government is well aware that the fundamental solution to the property market issue is to increase supply. After a year of hard work, the current-term Government has indeed managed to increase land supply in the short, medium and long terms, but it is still necessary for the Government to stabilise the property market with the "spicy" measures at this stage.

Some members of the public and of LegCo have urged the Government to reduce the "spiciness" of the measures. However, we must understand that our achievements in managing the property market in the past nine months or so did not come easily. In the Mainland of China, despite adjustment and control measures in place, new flats recently put on the market sold out within a day, and flat prices in Guangzhou have reportedly risen by 20 per cent in just six months. In London, residential units are also getting more expensive due to rising demand from overseas buyers. All these phenomena remind us that we must remain vigilant under the prevailing macro environment of abundant liquidity and ultra-low interest rates.

Before the introduction of the "spicy" measures, people in Hong Kong used to speculate in parking spaces and shops, and the prices of residential units were adjusted upward weekly. Have you forgotten those days? The "spicy" measures might not be popular, but they are truly necessary.

August 5, 2013