CY Leung insists housing policy won't cause property crash
Chief executive insists his housing blueprint will not lead to oversupply - and a market disaster
Leung Chun-ying has vowed to keep a close watch on global markets to ensure history does not repeat itself in a property crash as his extra-flats policy takes hold.
The chief executive was responding to an RTHK radio interviewer who asked whether his blueprint for building more homes could cause a crash if the US raises its rock-bottom interest rates in 2015, as some economists are predicting.
"We are mindful of the economic situation in the States and in Europe … and any possibility of an interest rate hike might bring market adjustments, so we are being very cautious," he said.
Leung also rejected a suggestion that his housing targets could lead to oversupply and repeat the failure of former chief executive Tung Chee-hwa's infamous "85,000-flats-a year" policy immediately after the handover.
"The 1997-98 crash of the market wasn't really due to oversupply," Leung said. "I remember very clearly that the Asian financial crisis hit Thailand on the second day of July 1997, and it hit Hong Kong - and not just Hong Kong, but also other Asian markets, including the property markets."
Tung's policy of building 85,000 subsidised flats a year was intended to cool the market at a time many people were priced out of buying a home - a similar situation to the one that prompted Leung to boost supply. But after its introduction, the Asian financial crisis sent prices spiralling, pushing many property owners to the brink of bankruptcy. Leung was said to have been the brains behind the policy.
