South China Morning Post columnist Michael Chugani says he thinks Hong Kong’s pro-democrats are more to blame for unaffordable housing than Chief Executive-of-six-months CY Leung. They could, he points out, have used the years they spent fruitlessly demanding universal suffrage lobbying for livelihood issues people care about. He says his landlord absorbs nearly half his income, which suggests that he is, sadly, seriously under-achieving career-wise, or that his choice of living accommodation is overly lavish and he should downsize to something more modest. Or a bit of both, of course.
(On the subject of columnists or any other people who possibly need to augment their earnings, I was recently reliably informed that competition among paper/cardboard scavengers has intensified. And what do I see over the weekend other than positive proof: an elderly lady painstakingly pulling advice slips out of the ATM waste bin outside HSBC on Lyndhurst Terrace, Central. It took her even longer than the people who make you wait to get cash while they shuffle funds around multiple accounts with different cards.)
Across the page, economist Andy Xie maintains his maverick reputation by approving of CY Leung’s recent policy address. Xie is famous for being sacked when employer Morgan Stanley grovelled to the Singapore government after he mass-emailed comments about the Lion City’s role as a money laundering centre for corrupt Indonesians. In that same email, he mentioned how most Singaporeans have seen little if any increase in living standards despite years of economic growth (as Punggol East voters were no doubt aware on Saturday). In today’s SCMP, he says much the same about our own little ex-colonial paradise ‘financial services hub’.
Xie is a fan of CY’s plans to reclaim, baby, reclaim. (Given the almost grotesque bureaucratic and political, let alone environmental, barriers to sourcing extra land onshore, many observers see reclamation as the only realistic way – other than invading Shenzhen – of creating more space for Hong Kong. The policy address gave the impression that CLK Airport-style artificial islands would be off the Western New Territories coast; looking at a map, you could shove them in south of Tuen Mun or off the Hong Kong coast on Shenzhen Bay.) His thesis is that Hong Kong is headed for serious social and political problems if it does not give people a better quality of life, notably bigger, yet affordable, homes. Only this will compensate for the stagnation of incomes by both cutting costs and making life more enjoyable. This is also in line with CY’s comments in the past, warning that people will simply quit Hong Kong if it does not significantly increase residential square feet per person in the next 20 years.
Xie’s conclusion is that this would keep Hong Kong stable, and that the alternative is ‘the downfall of the plutocracy’ – but surely the big-homes-on-reclamations plan implies the end of the property hegemony, too.
Cynics doubt CY’s commitment to change, and Xie’s article opens with a scanario that many of us deep down assume will in fact happen.
Hong Kong’s current property bubble is the result of much-vaunted expectations that US quantitative easing* will debase the US/HK dollar massively. But the anti-Keynsians and gold freaks seem to be overstating their case. The purchasing power of the dreaded ‘fiat money’ is holding up quite well in terms of, say, commodity prices and other assets and currencies. Hong Kong’s retail price increases seem to be largely RMB/Mainland-influenced. Our property prices are doubling to compensate for a halving of the US dollar that maybe isn’t going to happen.
So… The crash happens, prices halve, the landed middle class freak out and wet themselves a la 1998, CY Leung and team go into Donald Tsang-style push-prices-up-at-all-costs mode, and the whole rigomarol starts again faster than you can say ‘buying opportunity’…
*A little friendly word to RTHK Radio 3: your morning business news announcer does not need to interrupt interviewees constantly to request definitions of ‘quantitative easing’, ‘gini coefficient’, ‘A shares’ and other simple terms that everyone understands.