Property market speculators should take Chief Executive Carrie Lam Cheng Yuet-ngor's latest warning seriously if they don't like being caught off-guard while enjoying a free ride on the city's current housing boom.

Lam told lawmakers on Thursday, at the last question and answer session of the Legislative Council's year, that the government would consider taking further action if the property-cooling measures implemented so far do not work.

Few would have doubted that all those special stamp duties implemented by the government over the past several years to curb investment-speculative demand have failed.

This is evidenced by the fact that the city's residential property prices have continued to soar for 19 straight months as of the end of April, and the home purchase affordability index, a gauge measuring the homebuyer's monthly mortgage payment over household income, rose to 71 percent in the first quarter, shockingly far above the 20-year average of 44 percent. After all, who would believe the current property curbs are working and the market is operating normally when an average Hong Kong household could afford to buy a small apartment only if they save their all their earnings without eating and drinking for 19 years?

Investment-speculative demand, particularly from deep-pocketed investors from outside Hong Kong, has fuelled the persistent escalation of prices, squeezing many true homebuyers out of the market. Conceivably, the idea of imposing restrictions on the sale of residential properties to non-locals has been floated recently. It seems that the chief executive is receptive to the idea. She told legislators on Thursday that the government would review the policy on selling private apartments to non-locals and would not exclude the possibility of taking further steps to curb non-locals from buying residential property.

That the chief executive stopped short of making a firm commitment on this option is understandable. There is always concern about being accused of infringing on Hong Kong's sacrosanct free-wheeling capitalism. But the severity of the city's current housing crisis justifies stronger government intervention in the market; the government is obliged to remedy market failure caused by a serious imbalance between supply and demand. If a government is expected - indeed required - to take any necessary action whenever a natural disaster strikes and causes a food crisis, why shouldn't it be obliged to do so when a housing crisis breaks out - after all, housing is one of life's necessities, as important as food?

This explains why the authorities of Vancouver in Canada and Victoria State in Australia had no problem imposing punitive taxes to discourage investment demand for residential property in their cities. Canada and Australia practice the same kind of capitalism as Hong Kong does; it is unconvincing that one is more sacrosanct than the other. Moreover, any ideology will be rendered meaningless and useless if it doesn't serve the well-being of the majority of citizens well.

(HK Edition 07/13/2018 page12)