Government measures to regulate the property market get tougher with each move, but market reaction has grown calmer and calmer. The corrections in property prices get smaller and smaller too as they last shorter periods.
Some in the market consider the Buyer's Stamp Duty and Special Stamp Duty to be heavy-handed, but the Centa-City Index that reflects property prices dropped slightly from the 116.8 high in November to 114.3, a correction of 2percent, and that lasted for only four weeks.
Afterwards, the property market picked up again, continuing to set new highs. Government moves are mainly targeted at curbing demand. Increasing the supply was mentioned but has not yet been seen.
Government became aware that supply was not enough at the start of 2010 when Donald Tsang Yam-kuen attended an RTHK program during which lawyers and doctors complained they could not buy a home.
If it had acted quickly, the effects would have been seen by now.
Yet the supply of flats is still tight at present and property prices have risen by at least 50percent since then.
Regulatory measures to curb demand are like chemotherapy that kills both the good and bad cells, not only curbing the demand but also suppressing the supply.
It is because once an owner sells a flat, they cannot possibly buy another at the same price and therefore they stay put. Also, they see corrections in prices becoming smaller and lasting for shorter periods.
Chances are high that they will be selling a flat when prices are high and unable to buy when the market corrects itself. Many have recently become "homeless" that way.
Property owners are cautious. It seems the property market is rejecting the medicine and, even if the government increases the dosage, its effect will still be small.
Recently there have been reports that the Hong Kong Mortgage Corporation will tighten its mortgage insurance program, no longer providing for certain property developments. I am worried this will spur some buyers to rush into the market, and push up prices.
Actually, so long as the supply exists, prices may be controlled. If the government keeps applying chemotherapy, it is worrying that when there is an adequate supply of flats, the property market may have already been killed. Media guru KK Tsang takes a candid look at life.