tim's experiment

Has our glorious government changed its policy on land sales? The SCMPost seems to think so. On December 22 we were treated to a headline which went “HK selling less land to avoid market turmoil”. The headline accurately reflected the first paragraph, which went “The Hong Kong government is reducing land supply sharply to pre-empt possible turmoil in a market that is already feeling the chill of the Eurozone crisis.”

That seems fairly clear: market feeling Euro-chill, turmoil looming, government cutting land supply to avert said turmoil. But that was not what the newspaper said in the rest of the story at all. It seems that the sub editor (not a very bright specimen – “pre-empt” indeed!) worked out what he thought the story ought to have been, and stuck that on the front.

Reading on we came to the solid figures. Last quarter’s land sales were sufficient for about 1,770 flats. This year’s first quarter will add a further 430. The government’s most recent official plan was to build about 30,000 flats a year, so there is clearly something funny going on.

Over to Carrie Lam, who is in charge of these matters. The five sites to be sold in the next quarter would not be  “a huge supply”, she understated. Perhaps, she continued cautiously, 430  flats was a “modest figure”. But, she went on, “taking into account what we have done already, I think this is a very good initiative to continue the momentum of supplying land.” Which suggests, to put the matter bluntly, that the lady is out to lunch. The question of initiative does not arise. The government sells land all the time. “What we have done already” was to provide for 1.770 flats in the last quarter, when the official target called for 30,000 divided by four, which is 7,500. And we are not continuing “the momentum”, such as it is, if the next quarter’s figure is less than a third of its predecessor. But there you have it: no Euro-zone, no turmoil, no policy to cut the supply of land.

Some of this we get from Louis Chan, who is not an official of any kind: he works for Centaline. He said the government had noticed the proprerty market was “struggling” and was trying to use the land supply to “stabilise the market”. Still no mention of turmoil or Eurozones.

Then we came to another property professional, Alnwick Chan, who thought the constriction of supply was a simple accident, because some large sites were not ready. And then the story turned, very properly, to the comments from politicians. It did include the interesting statistic, for those wondering what a “struggling” market meant, that property prices had fallen 2.53 per cent from their peak last May.

Nobody concerned in this story comes out of it looking very good. Carrie Lam seems to have some difficulty in finding words to describe her Bureau’s activities which have any connection at all with reality. The SCMPost seems to have managed to recruit someone who can edit stories without reading them, or thinks he can. The property people are squeeling like stuck pigs at the possiblity that prices might actually droop a bit. And the fall so far is very disappointing.

What is going on here, I suspect, is that we are in the midst of a property bubble, which has nothing to do with the Eurozone and everything to do with vastly inflated prices. When bubbles burst there are recriminations. If officials are not selling land they will escape blame, or so they hope. This grubby desire effortlessly trumps their clear duty to increase the supply of a commodity which is in short supply, otherwise citizens would be living in proper homes instead of subdivided flats or illegally converted factories. Government of the rich, by the rich, for the rich continues.